Sir; You lament the purchase of c-stores by major multiples, as well as remarking on the high price per outlet being paid for these outlets (Leader, August 21). Leaving aside the issue of independence versus market dominance, I fear that at least in some cases, convenience store businesses may actually be under-selling themselves.
Only the naïve would believe that the multiples are paying an average half a million pounds per outlet unless they were going to be able to achieve substantial return on that investment within a year or two.
Shareholders and investors would not tolerate expansionist plans that undermined anything more than short-term profitability.
The negotiating advantage that multiples have in this situation is that they have gathered information and intelligence on their customers, through loyalty schemes, offers and promotions. This means that they can analyse, with some considerable accuracy, the potential of a c-store portfolio catchment.
Rarely is the c-store organisation able to qualify this ‘pricing of potential’ with its own analysis, simply because it has neither systematically gathered data on its clientele, nor conducted analysis of its catchment. Both exercises are straightforward - at least to gain a reasonable valuation of potential for each outlet. C-store owners who go down this route will find they are in a far better position to evaluate, and negotiate, a possible sale.