Gilligan Oil Pushes a Multi Brand Foodservice Strategy

Newest location features Dunkin’ Donuts and Subway in an effort to target customers throughout the day.

By Erin Rigik, Associate Editor.

Gilligan Oil Co. is aggressively embarking on a new foodservice model that aims to combine its c-stores and two QSR franchise partners under one roof to better pull a variety of customers into the stores during the breakfast and lunch dayparts.

Headquartered in Cincinnati, Gilligan Oil owns 35 stores in Ohio— of which it operates 30 and leases five—under the banner GOCO (an acronym for Gilligan Oil Co.), and also serves 50 independent dealers. The company additionally operates 18 Gills Express car washes. Its locations are branded Shell, Exxon or Sunoco.

Highly invested in foodservice, Gilligan Oil is currently operating a total of 28 food franchises, including four Popeyes, three Dunkin’ Donuts and 21 Subway restaurants, nine of which are standalone locations. In addition to the three Dunkin’ franchises, which opened in the last six months, Gilligan Oil has three more in development and aims to have 12 in operation by 2016 in the Cincinnati area. Many of those franchises will be entering stores that already have a Subway or Popeyes inside.

Something for Everyone
In February, Gilligan Oil rebuilt an existing Cincinnati location and used the opportunity to beef up its foodservice model to include a Subway and a Dunkin’ Donuts inside the same store.

The raze-and-rebuild began last September and transformed the existing Shell-branded location that formerly featured an 800-square foot island kiosk c-store and an adjacent car wash on the property.  The chain put in a new canopy, condensed the fuel pumps and eliminated the car wash in order to construct a 4,500-square-foot building with a Dunkin’ Donuts drive-through, Subway and a convenience store that spans about 2,220 square feet. The building features a food court area with 40 seats.

Pat Gilligan, founder of Gilligan Oil, said finding the right brands to co-exist was a challenging process because he didn’t want to cannibalize foodservice sales. “The Dunkin’ brand maximizes our morning daypart. We open at 5 a.m. and about 70% of our Dunkin’ sales are really in the door by 11 a.m. Subway dominates the lunch daypart and has a good dinner business so from a site utilization standpoint they really balance out nicely,” he said.

The new location is the chain’s first store to feature two QSR franchises in the same building, but the company plans to replicate the model going forward in a number of locations.

Gilligan noted that it can be difficult to gain a Subway in some areas because of the sheer number of them that exist today. “In this particular trade area (Cincinnati) Subway was available, so we were able to get it,” he said. “We don’t build anything now without a food franchise in it.”

Brand Management
When it comes to foodservice, GOCO forgoes traditional roller grill programs and relies entirely on its franchises for drawing foodservice customers. “Roller grills don’t work for us. We’ve tried them when we were an (Exxon) On the Run franchisee, and roller grills were a requirement along with nachos and various other fast-food bar type food items,” he said. “Unless you have a large chain that can devote time, internal resources, research and development and advertising promotions on a regular basis, you can’t drive enough sales per year consistently with a roller grill. At the end of the day, people want more than that offering.”

Gilligan focuses on foodservice because it’s the best investment for his business as the petroleum industry evolves. “If you’re going to buy a piece of property and put in gasoline, you’re going to have $2-3 million in that facility, depending on the piece of property you buy. You can’t make a living with just a c-store and gasoline,” he said.

An investment in recognizable foodservice brands customers know and trust draws a diverse array of hungry shoppers and consistent traffic. Gilligan estimates the company’s average food franchise sales total more than $600,000 per unit per year.  “With that we can invest in good corners and new retail opportunities, and we are pretty good at it,” he said.

Fueling Loyalty
Gilligan Oil is also heavily involved in the petroleum business. It owns tankers to supply its company-owned stores as well as multiple third party brands.

As gas prices continue to climb, customers are focusing their loyalty on brands that offer discount opportunities. In February 2010, Kroger and Shell teamed to offer a program in which customers earn rewards on grocery purchases they can redeem for savings on gasoline at Kroger Fuel Centers and participating Shell stations.

Rewards include a minimum of 10 cents off a gallon of gasoline for every 100 Fuel Points they earn by using their loyalty card when they buy various products inside Kroger stores.

As a Shell dealer, Gilligan Oil has seen the rewards program succeed in drawing customers to its stores. “Loyalty is an important part of what we all do today,” Gilligan said. “And customers are attracted to loyalty as it pertains to fuel discounts. Our Kroger-Shell alliance is by far the single greatest promotion that has existed at any time I can remember. How we can transfer that loyalty to the other aspects of our business will be the next phase of this program.”

History
Gilligan has a long history in the industry. He worked for BP Oil Co., before founding Gilligan Oil Co. in 1993, opening two stores on the Ohio State University campus. “In 1995 we put a Subway franchise in one of the stores, and I was the Subway franchisee. That’s how we started this model and it was a tremendous success, and from there we’re where we are  today,” he said.

The company went on to develop a business with a number of dealers as well as grow its company-operated locations. “We will probably always be 2-1 on our dealer count. It’s an efficient model,” Gilligan said. “There are a lot of 1-3 store operators out there that are good at what they do and there’s a good place for them in this industry.”

At a Glance: Gilligan Oil Co.

Store Count: 35 company-owned stores in Ohio under the GOCO banner. The company distributes to another 50 independent dealers.
Fuel Brands: Shell, Exxon and Sunoco
Employees: 600
Year Founded: 1993
Car washes: 18 units operating under the Gills Express brand
Foodservice Brands: 21 Subway locations, four Popeyes and three Dunkin’ Donuts   
with plans to open nine additional Dunkin’ locations by 2016

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