• Company Offering Texas Retailers New Dispensers & Higher Margin Fuels

  • Company Offering Texas Retailers New Dispensers & Higher Margin Fuels

    Petroleum Retailer Case Study
    Branded, Independently Owned Station
    Station Conversion: Premium UST to Regular 88 (E15) and E85

    A rapidly approaching EMV compliance deadline, wear and tear, remodeling to attract customers – there are many reasons retailers need to replace their dispensers. The fueling business has grown ever more competitive, with large national leaders setting a higher standard for customer expectations and driving margins lower for their smaller competitors. Regardless of how many stores you own, setting aside enough money to invest in new equipment can be difficult. Coming up with a strategy to grow profits when mega retailers are dominating the market with giant new stores can seem downright impossible.

    Texas Food & Fuel Association has heard from some members about a program that heavily subsidizes the purchase of new dispensers. The “catch” is that those top-of-the-line, EMV compliant dispensers with large multimedia display, full warranty and service contract, have to add new fuel products to their offerings: E85 and Regular 88 (E15). The new equipment and new fuels not only draw new customers, but provide the retailer with much wider margins on every gallon sold. 
    The program is an ongoing effort by Protec Fuel Management, a company with a long history in Texas. In 2005 one of Protec’s clients, HEB Grocery, asked the company to help them build a new flagship store, becoming the first in the state to offer E85. Today, Protec supplies more than 10% of the E85 and Regular 88 retailers across the country.

    Dozens of new branded and unbranded stores taking advantage of the program are expected to open in the first half of 2018. “Nationally, a store that follows the steps we outline typically sees a 15% increase in new volume from E85 and Regular 88, plus an additional a 3% in gasoline sales,” said Steve Walk, COO and Managing Partner at Protec. The new volume also comes with higher margins. For example, over the last twenty-four months, Protec has routinely been able to sell E85 at 45 cents (or more) below the price of 87 E10. Some customers are seeing that this creates a 4-5 cent extra margin in Regular 88 when sold at the same price as 87 E10.  Doing the math, a retailer with current gasoline sales of 100,000 gallons per month could translate the new sales volume and corresponding in-store sales into about $9,000 monthly or $108,000 annual extra profit.

    Mr. Walk added “Texas is special though, the high concentration of Flex Fuel Vehicles designed for E85 like Ford F150 and Chevy Silverado, and fact that all cars made over the last 18 years can use Regular 88 means with a focused effort even more is possible.” The opportunity is clear, and powerhouse retail brands like QuickTrip, Racetrack, and Murphy USA have been aggressively adding the fuels at locations across Texas and beyond. 

    The customizable dispenser multimedia package is also expected to play a significant role in promoting higher margin products on the island and in the store. Retailers with loyalty programs can use the screens to promote them and transition members from credit cards to ACH transactions, slashing fees and instantly boosting profits.   

    While new E85 tanks are sometimes installed, the easiest projects are at retailers with an under-utilized premium, midgrade, or diesel tank. In essence, the workers just clean the tank with E85, flush the lines and install the new dispensers. Work can often be completed in as little as one day. Converting a midgrade tank is popular because with the blender dispensers, the retailer can keep selling mid while adding the new fuels. Similarly, many retailers have seen diesel sales fall sharply, so it is an easy way to put the tank to good use.  

    Retailers interested in learning more should contact Protec at (561) 392-3667 or info@protecfuel.com.