The gas station market in Central Texas, particularly the Austin area, presents significant opportunities for investors. This case study outlines a recent success story where our client, Sam, a seasoned jobber/dealer, successfully acquired an underperforming gas station and transformed it into a profitable venture. Our team’s expertise helped our client by identifying opportunities, structuring favorable deals, and driving post-acquisition growth.
Our Client
Sam is an experienced gas station owner (sometimes referred to as a “jobber” or “dealer”) with a portfolio of gas stations in Austin. As a jobber, Sam resells fuel and owns several stations, many carrying his own brand. He also has agreements to operate branded stations from major oil companies. Sam’s strategy focuses on acquiring underperforming locations with potential for turnaround and long-term growth.
Identifying the Opportunity
Sam approached us with specific criteria for his next acquisition:
- Location: Central Texas, with a preference for the Austin metropolitan area.
- Size: Medium to large station with room for expansion.
- Condition: Underperforming but with potential for improvement.
- Financials: Reasonable acquisition cost with a clear path to profitability.
Through our extensive network and market analysis, we identified an underperforming gas station in North Austin that met Sam’s criteria. The station, owned by a major oil company, had been struggling with declining sales and operational inefficiencies.
Structuring the Deal
We facilitated negotiations between Sam and the seller, focusing on structuring a deal beneficial for both parties. Key components of the deal included:
- Acquisition Price: Negotiated a price based on the station’s current performance and factored in a discount that freed up capital for future potential improvement.
- Financing: We assisted Sam in securing favorable financing terms, leveraging his existing relationships with financial institutions.
- Brand Agreement: Structured an agreement allowing Sam to continue operating under the major’s brand for a specified period while transitioning to his own branding strategy.
- Due Diligence: Conducted thorough due diligence, including environmental assessments, financial audits, and operational evaluations to ensure a smooth transition and mitigate risks.
Post-Acquisition Strategy
Upon acquisition, Sam implemented a comprehensive turnaround strategy to enhance the station’s performance:
- Operational Improvements: Streamlined operations by upgrading equipment, implementing efficient inventory management systems, and training staff to improve customer service.
- Marketing and Branding: Launched targeted marketing campaigns to attract local customers and rebranded the station to reflect Sam’s brand identity.
- Product Diversification: Expanded product offerings, including convenience store items and automotive services, to increase revenue streams.
- Customer Engagement: Implemented loyalty programs and promotions to build a loyal customer base and drive repeat business.
Results and Impact
The turnaround strategy yielded impressive results within the first year:
- Increased Sales: Monthly fuel sales increased by 35%, and convenience store sales grew by 50%.
- Improved Margins: Operational efficiencies and strategic pricing improved profit margins.
- Enhanced Brand Presence: The rebranding efforts boosted the station’s visibility and reputation, attracting more customers.
This is just one of several recent transactions where our ability to identify, structure, and execute successful gas station acquisitions in Central Texas lead to a successful outcome for our client. By leveraging our market expertise and strategic approach, Sam was able to expand his portfolio and achieve significant growth. Our commitment to delivering exceptional value ensures that clients like Sam can capitalize on opportunities and thrive in the competitive gas station market.
About RESOLUT RE
As a leading commercial real estate brokerage in Central Texas, we specialize in helping clients find and acquire gas stations that align with their investment goals. Our comprehensive services include market analysis, deal structuring, financing assistance, and post-acquisition support. Contact us to learn how we can help you maximize your investment in the gas station market.
Want to learn how we can help you maximize your investment in the gas station market?
Reach out to Christopher Hernandez (chernandez@resolutre.com) or Zach Roesinger (zroesinger@resolutre.com) for more information about our 360 degree data-driven approach to acquisition and disposition of gas stations and convenience stores