Some entrepreneurs give the marketplace what it wants. Some give it what it needs. Eugene Thomas is trying to give it both.
Thomas is building the Quik-It franchise concept, a combination convenience store/gas station/eat-in and take-out restaurant. Hes hitching the name to a variety of other entities, betting that any or all will raise the names visibility.
He expects to have four Quik-It chicken restaurants by the end of the year, using them to demonstrate the viability of the concept as a franchising opportunity for other entrepreneurs.
Thomas is keenly aware of the value of recognizable brands. Thats why he is attempting to build equity in his proprietary brand, in part by teaming with other recognizable names and getting close to others. And hes not tying his fortunes to any one entity.
Earlier this year, a Quik-It Chicken franchise opened in Jackson Township, near Zelienople, in a venture that combines it with a gas station and a Buy n Fly convenience store. By the end of the year, Thomas expects to have a Quik-It location in East Liberty, near the new Home Depot store. Hell also have Quik-It chicken stores in Penn Hills, another franchise outlet, and Munhall, both attached to filling stations, in ventures he is pursuing with Mon Valley Petroleum Co.
Also on the drawing board is a plan for a Quik-It franchise at PNC Park, a move that will build visibility and associate the name with other highly visible brands.
Thomas is betting that this method of building brand equity will be a winning strategy for developing his business and franchising the Quik-It concept.
Thomas didnt plan to go into the convenience store business. He started out by buying Manchester Market, a mom-and-pop grocery on the North Side, while he was dabbling in real estate. He opened a second location on Federal Street. Crime and street gangs made the Manchester location too risky, leading Thomas to close it. Then Allegheny General Hospital bought the Federal Street property for its expansion.
So Thomas scouted for another spot for his store and found it just around the corner, off of Brighton Road, on Pennsylvania Avenue. He sold part of the parcel to Rite-Aid and used the proceeds and an $800,000 package of financing through the Urban Redevelopment Authority of Pittsburgh and private sources to build his more-refined prototype Quik-It convenience complex on the site.
To make it go, Thomas says, he believed he had to get a high-profile gasoline retailer to anchor the site, a marquee that he figured would add credibility to his operation. He struck a deal with Citgo to put in a self-service facility on the premises.
I wasnt going to do it without gasoline, says Thomas.
Convenience store owners have learned the value of gas pumps to fuel the rest of their operations. Uni-Marts Inc.s stores, for instance, do about 30 percent of their sales in gasoline. Dairy Marts Inc. does $160 million, or about a third of its total $477 million in sales, at its gasoline pumps.
Although gasoline at the retail level doesnt yield a large profit margin, it can draw customers and, the thinking goes, bring them into the high-profit convenience store and restaurant.
And minority customers, researchers have found, respond strongly to recognizable brands, but merchants often bypass city neighborhoods in favor or suburban locations. To work both sides of street, Thomas is trying to locate in areas close to a dense minority population, plus the opportunity to sell to a broader range of customers.
He also hopes to keep development costs in check by avoiding, at least for now, expensive suburban locations.
If it goes well, says Thomas, Ill get Quik-It Chicken in some of these stronger markets without having to spend $500,000 to buy a corner lot.
Sheetz Inc., the Altoona-based operator of more than 200 stores in five states, has built some of its proprietary labels to create a name brand image. Products like Zoup, or prepared soups, Dotz Bakery and Sheetz Coffeez give their stores proprietary products that consumers come to associate with the store.
While teaming Quik-It with other brands may appear to be a winning strategy, it isnt without pitfalls.
If they dont do well, hell have a tough time establishing it as a franchise, says Ken Franklin, president of Franchise Developments Inc., a Pittsburgh-based franchise consulting firm. Franklin adds that co-branding of concepts usually takes place after both entities have established their brand equity in the marketplace, not as a strategy to increase awareness of the name.
Thomas doesnt let an aversion to an unconventional approach or anything else stand in his way. And hes not, it appears, afraid to fail. After all, he points out, four banks turned him down for financing before he landed the funds he needed to build his new North Side store.
There are a lot of ways to view failure, says Thomas. I view failure of all types as a lesson. If youre not failing, youre not risking. No one whos a success doesnt fail.
Marriage of convenience
Wedding a convenience store to a fast-food restaurant isnt a new concept. It is a relationship that continues to evolve, however.
State College-based Uni-Marts Inc. has been employing the concept with a number of fast-food names, including Murrysvilles Foxs Pizza, since 1995. Uni-Marts has nearly 50 convenience stores that include a fast-food operation, and says it plans to continue to develop Blimpie Subs and Salads in both traditional and nontraditional locations.
Convenience store operators continue to incorporate food service in their outlets, but overall, the trend is moving away from on-site fast-food operations and toward proprietary products produced by the convenience store staff. Cited as reasons for the shift are franchise fees, human resource issues, and Altoona-based Sheetz Inc., which has tried out the convenience/fast food combination and continues to operate a few such stores, has decided to stay focused on a program it calls Made To Order, which employs touch-sensitive video screens where customers can order prepared items. The company believes this concept is the wave of the future.
Every fast feeder in America is focused on it right now, says Bill Reilly, Sheetzs vice president, food and beverage.
And Sheetz is staying close enough to food service to find it affecting the potential design of at least some of its future stores, a layout that will feature the food service operations in a separate building.