The Tulsa Forum by TulsaNow

(Tulsa, OK) - It's all very hush-hush at the moment, but KRMG News has gotten persistent reports that a prominent local restaurant owner and developer has plans to put a grocery store in the recently developed Detroit Lofts near ONEOK Field at 1st and Detroit in downtown Tulsa.

Developers have been seeking a grocery store for the downtown area for years, seeing it as an obvious, necessary catalyst to maintain the momentum that's already been created with downtown residential projects like the Philtower Lofts and the Mayo Hotel and others.

KRMG News contacted the restaurant owner in question.  He could not, at this time, confirm the reports about his supposed plans but neither did he deny them.

Brickhugger LLC, the developer of the Detroit Lofts as well as The Mayo, has said since they opened in the fall of last year that  the goal was to have a grocery on the ground floor of the Detroit Lofts.  The space was designed with that in mind.

Even without a grocery store, the Detroit Lofts quickly leased all of the 16 available units, but a grocery, if it does go there, would potentially serve the entire downtown area.

http://www.krmg.com/news/news/local/downtown-grocery-coming-detroit-lofts/n8yh/

I have heard this rumor and discussed it with the parties. It seems a good idea.

If this happens, it could help spur more development in the area. (lot next door to them at Archer and Elgin, as well as vast parking lot at Detroit and Archer) I wonder if this is the one that Townsend mentioned....? But his said vacant building...

Macy was at The Max speaking to a group along with Micheal Sager the other day.  I did not get a chance to really listen to what was going on, but just them collaborating and this coming about makes you stop and think.

She is working with someone else on this project.

You said you have conversed with both parties. Do you think it is likely to hapen?

yes

Eliott Nelson was planning to do a restaurant in the 1st Street lofts 4 years ago (when do the taxpayers get their money back?)

So I'm guessing the restaurateur is Nelson

Really wish I had been able to stick around to hear what all was going on, but still makes you wonder regardless

Existing building.

Ooooh, okay...

I talked to the "developer" about 6 months ago and they said the same thing than, they are looking for a restaurant for the north end lower level and on the south side a grocery store but its been a long road, I don't see how this is breaking news unless someone went over and took a tour...but there are alot of smoke and mirrors spin to getting free publicity also for your loft project!

This was posted on Twitter Friday:


http://twitter.com/SocMediaTulsa/statuses/51054062057164800

Zstyles, why would they need publicity? Their lofts are 100% occupied. Also, I have heard that Blake Ewing is doing this project. I have also heard that Elliot Nelson is doing it, does anybody know?

Elliot is not.

OK, but I'm assuming you can't say who. Cryptic....

Its a food lion

Looks nice:

http://www.foodlion.com/

Anyone know an opening date?

Holy crap. They are still in business?  It isn't a food lion.

There is no open date.  If there was, then it wouldn't be that date.  Think it's too far out until somebody starts work.

took that too literally  ;D

It's not a food lion. I promise.

Why would FOOD LION open one store in downtown Tulsa Oklahoma when there are ZERO stores anywhere else around here? This makes no business sense on logistics or anything else, you sure someone didn't tell you this on April 1st?

It's not a food lion.

Piggly Wiggly would be sweet......

Its definitely a Piggly Wiggly and definitely not a Food Lion.

So wait.  You're saying it's going to be a Food Lion?

Can't believe its a food lion.

I'd be lion if I said it was a food lion.

Alright, we get it! It's a food lion.

So it's not Food Lion because it's out of their distribution area, it's not Walmarts Marketside meant to copy Tesco's Fresh&Easy since Walmart only built for of them in AZ and they are closing, it's not Tesco since they are still concentrating on on CA,AZ,NV. Could it be a Ralph's Market from CA since they are owned by Kroger that has distribution centers in MO and TX? Or is it an offshoot of Petty's based on Tesco/Walmarts ideas?

why does out have to be a chain?

That's why I suggested Petty's. I was just thinking and guessing was all. I don't know all the local players that are in the grocey game in Tulsa anymore, same as it is out here. It's hard to tell who is truly local anymore.

not any of those.

Spell much people? I say its a Safeway.....

It's not a chain.

It's more like http://www.themarketatlarimer.com/, only with more "staples."

In addition to grocery (deli meats, fresh produce, dairy, baked goods, basic medicines, beer, soda, etc), think fresh flowers, a chef prepared food line (like Whole Foods), and a coffee bar.

Urban Market. Locally owned. It's a place to eat, get coffee, or buy some toothpaste.

Theoretically.

and penny candy for all the little rapscallions?

S-Mart

(http://3.bp.blogspot.com/_5a-ir0UQnn4/SkrL9AnGXmI/AAAAAAAACTU/_IGL30PWbmI/s320/1106646-6-shop-smart-shop-s-mart.jpg)

Except it will probably be a quarter rather than a penny.

http://www.thefreshmarket.com/company/stores.html  ?????

http://sprouts.com/home.php ??????

http://www.sfmarkets.com/ ?????

Downtown Denver still has no grocery store.....I wouldn't hold your breath.

Corner market by Batman? Perhaps.

Downtown can't support a grocery store yet.

I live downtown, I would support a grocery store.

Yes, people who live downtown may or may not go to a grocery store downtown depending on what they have in stock and what brands, etc etc.  This isn't going to be a walmart.  You want 10 different kinds of tortilla chips you won't be in luck.

On another note:

Those that live downtown, what do you want out of a downtown grocery store?

Can't people get Juice they want at the corner of 3rd and Elgin?

Basics (veggies, fruit, meat, dairy, toothpaste) and a bag of dogfood

Does anyone know the square footage of the proposed location?

The grocery industry makes it fairly easy to calculate profit within a market tolerance level.  

For instance, QuikTrip stores make a majority of their profit from gas, therefore the items in their store can suffice to return only a moderate margin (even though they seem damn expensive) after distribution and stocking costs.  Everything on the shelves, the soda fountain, the outstanding service, and the yummy sandwiches are there to get you to stop and buy gas to the tune of over 7 Billion dollars a year.

In a small grocery store without the gas offering you have three dimensions to work with:

1. Margin- Grocery stores are low margin, sometimes only a few cents on the dollar.  Therefore they have to sell a lot of 3 Guys Smokin' Razz Bold & Spicy to make a dollar.  They have to stock it, move it around on pallets and pay a dude to make sure the labels are facing the right direction on the shelves.

2. Size/Volume- Grocery stores combat margin by increasing size and sales volume.  The bigger the store, the more product they have the space to display, the more volume they can do in sales.  Whole Foods can sell a heck of a lot more Smokin' Spice than Siegi's.  They can offer a lower price because they have more room to stock, display and distribute the product.  

3. Demographic- Demo effects both dimensions above and dictates price tolerance. If Reasor's is 5 miles away and carries Smokin' Blues competition BBQ sauce for $3.99, and Sheen's Grocery & Porn is downtown but offers the product at $6.00 a bottle.  Some of the demographic will will willing to drive the extra 5 minutes to get a lower price.  If the local demographic is light in numbers and light in income, Sheen's will have to carry discount products and offer discount prices to attract them, this also means lower total margin.

There are also a myriad of other problems that make the concept less attractive. Developing a grocery store downtown is difficult because when you reduce the size (to fit a downtown or infill footprint) you have to increase the margin to make up for the loss in volume.  If you increase the size, you are dealing with very high lease rates as compared to free-standing developed environments, so you still have to increase the margin on product.  No matter how you slice it, you have to either offer standard product at an increased price, or you have to offer off-brand discount product at a standard product cost.  This was much of the complaint associated with the past downtown grocery offerings.  Throw in security, parking, and service capacity (ability for 53' trucks to stage, dock and deliver, and you have a very difficult proposition.  Not impossible, but difficult.

I think Blake's post tells us how they will make most of there profits. Between the flowers, the prepared food line, and the coffee bar they should be able to make a profit and not be to expensive for a "urban" store.

When I get back to town and this is open I am sure I will use it living just outside of downtown.

Trog, that is a tired old argument. So many people say that, and then turn around and say why would I ever live downtown if there's not a grocery store. It's a chicken and egg situation. When this grocery store gets built, you will probably see development immediately around it because people love convenience. It would be nice to have restaurants, a grocery store, and several other retail options all within walking distance. The more options for shopping and other services there are downtown the more people it will attract.

I like the idea of a local specialty grocer for downtown proper, which has a smaller population and needs to be an urban format (entrance facing sidewalk; little to no parking) as it won't have as many people driving to it.  I also like the idea of downtown having a full-service grocery like Reasor's located in Uptown that would also serve the dense neighborhoods in that area, as well as downtown.  The nearest grocery stores to the (currently) most desirable walkable neighborhoods in the city are Reasor's at 15th & Lewis, Petty's in Utica Square and the Food Pyramid/Whole Foods at 41st & Peoria.  There is a large gap in between those stores (if you can even count Petty's as it's more of a specialty market) that includes neighborhoods like Cherry Street, Maple Ridge and Riverview.  Such a store should be urban but also have an adjacent parking lot behind, to-the-side or underground.  Such a store would be a gold mine for Reasor's which is a local business that could make this their flagship..

Can't support an 18,000 sq ft arena, a bike shop, full service pizzeria, ecclectic gift shop or t-shirt store either.  What's your point again?

Exactly! I mean was anybody even at that Lady Gaga concert last night? Downtown is dead. I hate it. It's boring. There's nothing to do.

I've heard it's the other way around, they sell gas to get you into the store to buy milk, beer, sandwiches, etc.  I have nothing to back that up with though.

Somewhat higher prices at downtown stores are part of the urban lifestyle according to previous threads discussing urban vs. suburban/rural lifestyles.  The urbanite chooses to pay for the convenience and proximity of things to do.  One of the compensating features is not needing personal transportation.  Although personal transportation is still needed in cities like Tulsa, if you go to the big urban model like NYC, Boston, Phila, Detroit, etc I think the model works.  It comes down to what you want and how much you can/will pay for that life.

I think the idea proposed where it would be not only a basic grocer, but also have prepared food and a chef, is a good idea.  I don't think downtown can support a full grocery store right now, but if it doubles as a lunch spot for downtown workers, or a place to get a quick bite before a game or a show, I think it would make the operation profitable even if the grocer side gets less business.  Maybe even have a small wine bar to cater to the night crowd.  I think it is a good stopgap while downtown is growing its residential sector.  

The existance of a business doesn't mean that it makes money.  It doesnt mean that they are making a lot of money either.  A business can slowly bleed money for years before the owner gives up.  In fact, i could run a business losing money for quite a while.  As long as you have a credit card and a cash flow you can continue to do business.  Also, the places you listed are destinations for people to go.  I don't know of another bike shop near there.  I don't know of another max retropub.  I can point to several grocery stores people in midtown would go to before downtown.  And no, the bok center isn't going to pull tons of business for a grocery store.

They don't build a huge building with refrigerators to get you to come buy gas.  The money is when you come inside.

This is correct. My sister used to work at a gas station while she was in high school, and said that they were lucky to break even on gas, and that they made all their profit inside the store.

Yeah. The only places making a profit on gas is Shell and those "real gas" places that charge you 10-15c over quiktrip prices, but even their profit is pretty slim.

I don't believe this store is targeted at people living in midtown. It think it is intended to be more of a small market/pick-up restaurant for the people living and working downtown. Not many people will do their full shopping there, more likely just stuff to make dinner or to last 1-3 days.

Obviously.  But people like to pretend like it's the same as a restaurant or specialty store.

Retail food and retail non- alcoholic beverages sold alongside wine by the glass?  Think about it.

Yeah, it's going to be probably very small/no profit grocery store with profit from the added services.

LOL!

Look at this one.

http://www.waltonsfancyandstaple.com/home.aspx (http://www.waltonsfancyandstaple.com/home.aspx)

This is the closest thing I can find to it. Looks like a nice fit in downtown Tulsa. I wouldn't get too hung up on "grocery store."

"Market" sounds better - basic staples, some pre-prepared dishes, fresh local produce, some specialty items, etc.

This is not a place to go load up on groceries for two weeks. Urban markets are much different. Our suburban midwestern lifestyle has trained us to think that grocery stores are places where we need carts, bags, and a couple hundred dollars. Downtown residents will be glad to go pick up (or have them delivered) some pasta, eggs, milk, rotisserie chicken, bacon, toilet paper, and dog food.

It will also be one of the only places downtown where you can make your own salad, eat without leaving a tip, and enjoy healthy, chef-prepared lunch in a food line. Quick and fresh lunch and dinner. Smoothies. Coffee. Mmmm.

I haven't seen any numbers involving square footage and grocery margins. My instincts tell me that it'll be pretty well received and pretty profitable, even though it's not a Food Lion.

I think it will be very well received, that's not the challenge.  The challenge is developing and maintaining enough volume to pay overhead, and turn a profit.  The most significant overhead for a grocery is the employees. 

There are companies that overcome this very well in urban settings.  In Chicago, St. Louis, and several other cities in the Midwest, ALDI stores thrive because they operate a low overhead operation with a small store, single employee, and off name goods.

The proposed model is the opposite, with higher overhead.  If someone can provide a sqft size, and based on info in the article, it would not be that difficult to calculate $per sf necessary, and therefore volume necessary to turn a profit. 

GreenArch is already going up just accross the street, and I heard something about a ball park.

The average profit margin on a grocery is about 2% or so, if I remember correctly.

It would take a model like this, with varied services, deli, china, home goods, floral, plus grocery items to generate enough dollars in the downtown area right now, INHO.

The basic question remains, there might be a need, but is there enough of a market base downtown for a small grocery operation in the current time?

Personality of the owner, good service, etc. would have a lot to do with building a customer base, as it does in any small retail operation.
Accessibility, convenient location-walkability, hours of operation.  This is a little different perspective, but still similar:there are some c store owners in town that thought they had found Solomon's Mines when they bought their location, but instead bought themselves a job where they were making about $2.00 an hour.

If there is a grocery store downtown, I`ll shop there often even though I don`t live downtown... I`ll shop there for the same reason I eat in the Blue Dome and Brady and it`s the same reason I go to events like the NCAA and CUSA tournaments... I want to see downtown succeed and I will do most anything within my power to help that happen.

A small catering operation (think box lunches for the companies downtown) as well as grocery delivery and providing some unusual items you wouldn't readily find at Reasor's would go a long way in ensuring it's financial success.  Quite obviously, the more people living within walking distance will help.  More important is good accessibility and parking by car. We all have this utopian dream of a walkable downtown with 30,000 residents and mass transit convenience, but that's still a week or two off.    ;)

It wouldn't bother me to schlep a few days groceries, but I don't know of too many people willing to walk 6 to 12 blocks with a bag of groceries or 10 lb bag of dog food.

You right Conan. When you cant even park and get gas without having to fight off the people hounding you for money. Just think how it would be with a bag of groceries.

Thats the spirit.

How far do you live away from downtown?

LOL, obviously you can't lie and say you've got nothing to help them with when you've got a bag full of groceries.  I suppose you could carry a handful of dog biscuits in your pocket to feed the bums er chronically downtrodden with those.

I live near TU... I usually shop at the 15th and Lewis Reasor`s or Petty`s at Utica Square. I`ll pretty much drive past a Reasor`s to go downtown, but I think ventures like this are the only things that help make us unique.

I live near Cherry Street and I work downtown.  I would stop by on my way home from work for some prepared dinner or to pick up some staples even though I live very close to Reasors at 15th and Lewis.

This is great.  Its what we need to keep the place going strong until Downtown builds up more with apartments/condos.  There is a lot of excitement over new places and then it dies down.  After it opens I expect updates when you guys go so we can keep you honest and not going to the other Oklahoma owned grocery store.

If you want to see a good business model which has worked against what common sense would tell you, look no further than Dwelling Spaces.  It's an Oklahoma-centric gift shop in downtown which opened before a lot of the other critical mass arrived.  I figured it had a six month life-span.

Several reasons this has worked are:

-Great service, great people staffing the place that make you want to come back
-Unusual items you don't find anywhere else in Tulsa, or not easily found elsewhere
-I'll go there because I believe it adds something to the downtown culture and I want to see it succeed.  I think others shop there because of that as well.

I think if the owners of this market will take a look at what has helped Mary Beth be a success, it will help them succeed as well.  Dumb luck won't cut it.

I like the attitude that people will support it because it's there.  I'm seeing and hearing of more people supporting local proprietors over larger chains.  I know I try to wherever possible and practical.

I don't live or work downtown but I spend most of my social life there.

If the store has something to offer me, I'll use it often.  If it's not what I need, I'll see you at Reasors.

Same thing with the bars/restaurants downtown.  There are several that have what I need and a few that don't.   There are other customers for those bars/restaurants and they stay in business.

Same deal for this store...there is a need for it.  Whether it suits my needs or someone else's...we'll see.

You again assume because a place exists they are making money.  I am not saying it is losing money.  But I don't know if she is making a ton on it either.  What is a success?  $1 profit?  $10k profit?  $50k?  100k?  I am glad that it is open and want it to succeed.  So, go shop there everybody.

I would love a downtown place to buy beer to go. My New's Years resolution was to drink more.

Yes, I know that Quik-Trip sells beer. Believe me, I know.

Does Treats on Main sell beer?

DT needs a package store....gots to have high point beer, wine and booze

Wow Charlie, I bet you must have your MBA from Harvard Bidness School with that logic.  I'd never thought of that before!

Small businesses don't stay around for four years racking by up debt and losing money.  At least not with tight credit restrictions.  Some business owners are content making a meager existence if it means they don't have to punch a clock for someone else.  I have no idea how well Dwelling Spaces does, I can simply assume it's enough to keep the owner from having to work elsewhere and I appreciate the fact it's there.  That really doesn't matter to me.  Your original assertion that downtown can't or won't support a grocery yet is wrong.  Most certainly it will, especially if they are willing to listen to the kinds of goods and services people want which they can practically and economically provide. 

I guess the current Superlegerra location was the last package store in the IDL, wasn't it?  Maybe Michael71 might consider a second store?

By law no person can have a 2nd package store in OK.  

Now if a husband owns one in his name then the wife can own one in her name and the son can own a distributorship like the Parkhills.  Then they can meet with others and set prices.

Anyway, I digress.

The new Grocery market needs a second door with booze, wine, and high point beer behind it.

I didn't realize it's been 4 years already.  As more people find out about it there will be more traffic and sales.  I dont follow the owners of downtown businesses possible side jobs so I will take your word for that.  And I didn say anything about bleeding money.  Even with a small loss for 3 years moving towards break even the store is worth while with increasing sales.  And, remember do not call it a grocery store.  It's a market, a food lion cant be supported downtown.  A small market with income from a possible lunch crowd and other services can be.  I can't remember ever going to a grocery store for lunch.  But I might go there.

Actually I have in Wichita Falls and it was good. 

http://www.marketstreetunited.com/aboutus.asp

I still can't fathom why Tulsa couldn't have a successful concept like this in midtown or out south.  It's too big a footprint for downtown at this point since we've clarified it's a grocery store that downtown couldn't support not a market.  Thanks for the clarification.

You can get lunch at Whole Paycheck, BTW.

I would have thought a whole paycheck would have tried to make a smaller store downtown.  I guess they are too corporate.  This is more of a specific, have to know the area, specialty type project.  Not someplace that shows up on a spreadsheet.  I was just messing with you guys.  I just thought I would throw out the fun phrase "downtown can't support".  This place will make it, because they will make it work.  Thats what small business has over huge business.  They can tweak what works and what doesn't.  They don't have to ask permission or have somebody in a corporate office deciding what to order.  Etc. Etc.  It probably won't be easy until the new developments take hold.  Hopefully everybody makes an effort to help it along while it gets going.


BTW, that market street place is pretty big.  I guess its just a differently branded whole foods?

How big of a difference do you think brands make at the market?  A search for dog food on petco.com comes back with 363 products (including multiple size bags).  What about other types of items.  What items do you think the brand matters?  I know there are only a few items that people are picky about brands.  Probably mostly clothes or body cleaning items.  Shampoo, detergent, soap, etc.

Glad you're not in marketing!

Not so much like Whole Paycheck.  Though I've not been in there since the big expansion.  I refuse to pay snob points on my food.  ;)

They are a unit of United Markets which I believe is about like Albertsons, Food Pyramid, and the like as far as stocking plans.  They've got a selection of fresh and organic, but it's also got plenty of processed and poisoned choices for the convenience crowd.  ;D The cool part of the food offerings is it's more like a food court with multiple genre's and not just a deli counter or baked chickens in a plastic container next to the bakery.  Naturally you can buy wine and good beer there because it's in Texas and not Dryklohoma.

Was hoping somebody was a marketing major and could finally put their degree to use.

From 2008
http://online.wsj.com/article/SB122592835021203025.html

Laundry habits are changing, too. Early signs indicate shoppers are switching to cheaper detergents and softeners, a rare shift in one of the most brand-loyal product categories.

Sales of private-label detergent rose 12% over the 52-weeks ended Sept. 6, to $189 million, according to market-data company Information Resources Inc., or IRI. Lower-priced brand-names are posting gains, too. Last week, Procter & Gamble Co. reported that volume sales of its bargain-priced Gain detergent rose 10% in the quarter ended Sept. 30, offsetting weaker results for the market-leading and pricier Tide.

Meanwhile, estimated retail sales of value-oriented Purex fabric softener, owned by Henkel AG, rose more than 60% over the past six months, the company says. "We view the economic slowdown as an opportunity for our brand," says Greg Tipsord, senior vice president of Henkel's U.S. laundry care. "It's causing the consumer to rethink what had become a habit."

So shoppers are open to change based on cost in a down economy (duh).  But I still don't know how they react to convienience of a purchase vs brand loyalty.  At what distance will somebody travel to get a specific brand they want vs just switch brands?  

http://pauravshukla.blogspot.com/2009/09/impact-of-contextual-factors-brand.html (http://pauravshukla.blogspot.com/2009/09/impact-of-contextual-factors-brand.html)

This claims that "* loyalty was not significantly affected by past usage, expectations and convenience.
"

How can that even be possible??

I have some experience dealing with Grocery stores.  From 1993 to 2000 I was a loss prevention consultant for a number of retail chains, among those was Kroger, a major convenience store chain, and IGA.  I gained a very broad understanding of how these stores maintain profit margin and reduce loss.  I also understand how the little loss leaders work.

Deli, bakery, and prepared meals all operate at a loss.  The goal is to mitigate that loss by increasing volume in shelf sales and in some cases shelf lease.

The reason these areas operate at a loss is because of the # of employees necessary to operate, the energy costs, initial equipment, continuing maintenance costs and the daily shrink.  At the end of the day a lot of food goes into the dumpster, or (as is the case with Kroger) is donated.

If a customer comes into the store to buy a sandwich and leaves with only a sandwich, the store has lost money, even though that sandwich may have cost the customer more than say a Subway down the street.  Why?  Because the Subway down the street does not have $600,000 of perishable products on the shelves or a 10,000sqft footprint.  Sure, that sandwich may have only cost $2 to make, but it actually cost the store upwards of $7 when you apply all of the logic.

The VP of Kroger used to tell me that anyone that came into their store and bought less than $20 in shelf products cost them money.

The convenience store industry had a very different model but the challenge was the same.  Nothing in their store is of much value to them.  Fuel is what they sell.  The "convenience" is there to sell the gas.  

So. . .Long story short. . .All of this coffee bar-onsite chief-catering-bakery-barbershop-wine bar nonsense is not supportive of the profit necessary to make the "Market" side of the equation work.  Every shelf in a market represents negative income and/or locked up capital unless enough volume can be generated to turn product at a reliable pace.  If the coffee bar-onsite chief-catering-bakery-barbershop-wine bar nonsense actually brings in customers that spend $xx on shelf items durring every visit, than we have another story.

The reason I keep inquiring about sqft#s is because that will dictate what the $xx per visit is.

The sandwich which took 3 minutes of combined labor at $10/hour ($0.50) and had a food cost of $1.50 including average waste, sold at $5.00 is still contributing $3.00 to the effort.  $$ per visit would go down with more visitors.  The guy coming in isn't costing them because of his visit.   He is still moving things $3 closer towards black ink.  At most, the overhead hit from his visit should be calculated on the footprint of the store being used by them offering that product versus not offering that product.   And what would squarefoot really matter?  Cost per squarefoot being paid would be the factor.  The prepared foods need a fast turnover so more people can come through and volume will be high.   QT has to be making a fortune off of their prepared sandwiches.  I could see the deli counter at the very back of a giant grocery store being prohibitive of turning a profit due to bad design.

Gaspar, you're statement that convenience stores make their money off of gas is simply incorrect. Right now the cost of a barrel of oil is about $108. One barrel of oil is equal to  42 gallons of oil. 108 divided by 42 equals 2.57. So it costs $2.57 for a galling of gas. Next add in shipping costs for that gas. After all these expenses are paid, most gas stations don't really make any money off of gas. They are not charging you an unfairly high amount. They are simply trying to not lose money.

What a completely, entirely, utterly idiotic statement. Maybe I should try thinking before I post...

This site tracks gasoline in California...

http://energyalmanac.ca.gov/gasoline/margins/index.html

They show profits around 3% to the retailer

Yeah, Saying you "lost" money on a sandwich because you attribute costs like the whole rest of the food in the grocery store is not correct.

My car requires premium gasoline, not crude oil.

It's obvious that many people do not understand the fluctuating costs that are involved in refining crude oil to use as gasoline.  I'm no genius when it comes to that, but my dad did work for Sun Refinery for 25 years, and my grandfather worked there before him so I'd say I have a little knowledge.  It's not as simple as taking the cost of crude and dividing it by the amount of gallons contained within a barrel of it.

The obvious answer is to stop sellling those sandwiches.  They couldl also require a cover charge or minimum purchase like bars with live entertainment often do to make sure everyone spends at least $20.

Stay a night in a Holiday Inn Express.

Again, it's not jut the cost per sqft.  Each sqft is tied to an inventory investment with a very low margin.  A sqft may represent $100 worth of inventory that only generates $1-$2 in profit when sold.  The longer that inventory sits the higher the shrink.  If it sits for over a month, the shrink may be 100% of the profit and the product is sold at a loss.

I agree with Gaspar.

The CFO of one  c store chain that shall remain nameless, not locally based  but with a big local-/6 state footprint-told me that the shelf lease in each of their stores-the beer signs cutouts  with the bimbo of the day wrapped around a Nascar driver, the specialty merchandise by the door , the toppers on the gas pumps, the promo items on the counter where there was about enough room to put down your six pack to check out..... this more than paid the overhead for all of the stores,  everything.  Any gas bought was a profit, and most everything else in the store was loss leader.

I think we're kind of comparing dollars to sheckels. 

Gaspar is right, if the sq ft. numbers don't pan out, something needs to tweaked or moved out of the store.

One chain that I have worked with constantly runs numbers on the sq. ft. sales of each item, daily.  If the numbers fall below a certain level, it triggers all sorts of reviews, both with the vendor and without the vendor. And vendors may shortly be removed from the store if sales stay below a certain level.

And any competent small retail owner/operator  keeps a constant eye on the numbers, and can probably tell you exactly how much is in the cash register, and almost exactly how much inventory is in the store, what is moving, and what works.

I use the comparison, because the small "market" concept is closer in similarity than the larger sq.ft. operation, 10,000 sq. 

And if the service is good, a loyal customer base can be built, inventory can be tweaked, etc.

However, all of this said, the operation may be successfully run, but the biggest problem that causes immediate death in most small businesses is that of under capitalization.   I've seen it again and again in retail, in many different areas, from Men's clothing to restaurants , these having  the highest mortality rates in retail, to c stores operations to car dealerships.   

Stores with excellent products and merchandising, good advertising, well trained staff, good location, but no backup capital, and this was what led to the vacant storefront in a couple of years.

And in today's current climate, credit or  a lifeline of some nature  if market conditions cause a slowdown in traffic, or if the city decides to tear up the intersection or street in front of the store-is hard to obtain.  So many small business owners all of the cash into the buildout and merchandise, but don't have or have access to an "emergency" stash to get them over the rough spots.

They do make money and it is a fair profit (of course I don't believe there is such a thing as an "unfair profit").  They make about $.09 - $.15 per gallon.  That does not sound like much, but compared to their profits on shelf items, the volume of sales, and the low overhead associated with pumps as compared to the convenience side, it is quite significant.

Take QuikTrip for instance, the (577) stores have up to 20 pumps and turn around 7.5 billion in Fuel sales equaling about 750 million in gross profit.  These same stores sell about 500 million in grocery/fountan/and beer equaling only $10 million in gross profit.  Now, if you subtract the overhead associated with the food sales vs the fuel sales, it's not even a competition.

Now. . .just for fun, take away the gas sales and try to run the 577 stores on the market alone.  Their yearly GROSS profit per store would be $17,300.  Now subtract the volume generated from people stoping for gas and buying a slim-jim and 6 pack of Keystone Light, and your in the red!

1. One barrel of oil = only about 19-20 gallons of gas.
2. You are quoting prices for "oil futures" not the actual cost of oil

Most businesses fail because people allow emotion to overrule logic.  Just because you perceive a need for a product or service does not mean that you can simply provide that product at a sustainable profit.

Yes, it actually is, but thanks for playing.

$750M + $500M = $10M Wha?

7.5B is the company's total revenues for the year from any financial source I can find.

Even if that was all in fuel sales at 9c/gallon profit = about $193M (of which the majority of maintenance and construction costs at a QT goes to the fuel systems)

Overhead on the food stuffs is fairly low. Most vendors stock their own supplies and when you are paying $1 for your fountain quart, QT is pocketing roughly 90% of that.

Now I understand why you are a Republican.  The manager Bob is making $3 profit a sandwich.  Manager Gaspar is having a hard time over in the frozen food section because he can't get anybody to fix the freezers right.  Every damn month!.  Luckily Gaspar does the books.  Bob sold 1000 sandwiches making the company $3,000 profit on $1,000 in food costs.  Gaspar lost $2,000 in ruined products.  Gaspar determines that the sandwich counter sales are part of the frozen food section.  Now the sandwich shop just lost the company -$1000 in food costs and Gaspars section made $1000 profit ($3k-$2k lost).  This goes on for a few months and so they fire Bob and close their money losing sandwich shop.  Now the store is making a $3k a month less. 

Doesn't matter how you do the books.  The total for the store will be the same profit or loss, it is what it is.  But you only replace the sandwich shop if you can make more money using the space for something else.  You also don't use costs unrelated to the sandwich shop to determine if you should close that portion of the store and reopen it as more freezer section.

He is saying they only make $10 million profit the food and 750 million from the gas.

As well as other distillates and by-products which are used in all sorts of finished goods. 

QT most definitely operates on a cost/sq ft. model and they know pretty much daily how each store is doing. 

QuikTrip drew high regard from its competition. In 1998 QuikTrip stores averaged $2 million in merchandise sales and three million gallons of gasoline

Read more: http://www.answers.com/topic/quiktrip-corporation#ixzz1Iquvs7W0 (http://www.answers.com/topic/quiktrip-corporation#ixzz1Iquvs7W0)

Now gas is 3x as much as it was in 1998 so that makes out to probably 9 million vs 2.5 million with inflation+more food items.

They've fluctuated between 7 and 8 Bil over the last few years.  I believe they are over that today, but the economy may have put them back a bit. 

They make between .15 and .25 a gallon now because they own the distribution channel.  They used to only charge 9.5 cents back in the late 90's  that's what really shut out their competition.  You're right in that I did my math on the gross wrong.  They're at around 650 Million gross profit on fuel.  The grocery estimate is still accurate enough for the women I date.

They sell around 2.5 to 3 billion gallons of gas every year, making up 1.7% of all of the gas sold in the United States.

Everything in their model is designed for customer satisfaction so that you will buy gas there.  Rumor is now that they will soon be upgrading their bakery with fresh artisan breads delivered daily to every store.

That can't be right because Gaspar says they make a lower markup on Gas than food and that would mean the majority of their profit came inside the store.

But.. but...

Along the lines of what comes out of a 42 gallon barrel of oil: 44.2 gallons of refined products

WHAT A BARREL OF CRUDE OIL MAKES
 
  Product Gallons per barrel 
  gasoline 19.5
  distillate fuel oil
(Includes both home heating oil and diesel fuel) 9.2
  kerosene-type jet fuel  4.1
  residual fuel oil
(Heavy oils used as fuels in industry, marine transportation and for electric  power generation) 2.3
  liquefied refinery gasses 1.9
  still gas 1.9
  coke 1.8
  asphalt and road oil 1.3
  petrochemical feedstocks 1.2
  lubricants 0.5
  kerosene 0.2
  other 0.3

Figures are based on 1995 average yields for U.S. refineries. One barrel contains 42 gallons of crude oil. The total volume of products made is 2.2 gallons greater than the original 42 gallons of crude oil. This represents "processing gain."

http://www.txoga.org/articles/308/1/WHAT-A-BARREL-OF-CRUDE-OIL-MAKES
 

What was I thinking? It was late, and I wasn't thinking at all. But, I was just trying to point out that oil and gas are expensive, and that last I heard, many convenience stores would go out of business if they simply sold gas. I understand that times have changed since then, but to the best of my knowledge, they do make money off of what's inside.

What is somewhat scary is QT seems to control the market gas prices in the Tulsa area.  You will be hard-pressed to find such level pricing anywhere else.  In OKC where no one dominates the market, you will see as much as .30 difference from one station to another as you drive around and there's even two On Cue Expresses (Closest thing OKC has to QT) within two miles of each other which rarely have the same fuel prices.

In Tulsa you know what fuel will be once you see a QT sign. If it's $3.39 there, it's going to be $3.49 at any Shell or Sinclair.  That's something you can count on throughout the city with the exception of the one or two full service stations still around.

Gaspar,

The project in question is really not a grocery store. With all due respect, those metrics will not apply.

The perishable products of which you speak don't "perish" at the market They get turned into lunch for the restaurant customers before their perishable dates hit. When the apples start getting old, for example, they become an apple pie.

This place has a food line with a salad bar. It will be hot, fresh, chef-prepared food. That will be the driving force. Also, there will be coffee and baked items.

As for the market, there will be much more dry pasta, cereal, and canned and frozen food than than there will food with a short shelf life. The produce will be fresh, but as I mentioned, it will be easy to turn that into food for the food line as it gets near the end of its date, same thing with baked goods, deli items, and rotisserie chickens.

There is a method to this madness.

Actually, Wal Mart (Murphy's USA) has been undercutting QT a bit (at least for a day or two) when it comes to gas prices.  If QT goes up say, mid-afternoon, their typical dime increase, the Murphy's usually won't raise theirs until mid-morning the next day.  Gives me time to get there before they do.  As I drove home I noticed they were 3.43 at the one at Admiral/Memorial.  QT is still 3.45

Fortunately, since I bought my new steed, I don't worry near as much about gas prices as I did with the truck.  But I do have to admit to sticker shock each time I go since it's a bit longer between visits to the pump with the Sonata.  My poor truck had a hard time passing gas stations without wanting a drink.

I wonder how Sauerkraut's old beater is making out with the high gas prices...

So Blake, any idea how much items will cost at this store? Pretty standard stuff like box of cereal, gallon of milk, carton of eggs, etc.

I always look at people like they have a foot growing out of their forehead when they tell me about gas being 1 or 2 cents cheaper somewhere.

I'm a weirdo though, I don't buy gas at QT.  I pay more for ethanol free gas at an unmanned station with my debit card.  In my experience, the slight increase in gas mileage more than makes up for the price difference (actually making it cheaper)- but that usually starts another debate.   Thing is, I still visit QT almost daily for various items.  I am 100% confident they are still making money off of me.

If this place is going to offer quick & ready food, it will succeed or fail based on how easy it is to get in and out of the place.

More than Reasors, though not ridiculous. I'd expect a higher quality product than typical grocery, though not like Petty's.

Ok, so we can abandon the grocery model.  This is more of a downtown deli. Much smaller footprint, and little investment tied up in inventory.  You just emancipated a significant amount of capital and risk.

Whew! There's a sigh of relief.

I'd still call it a market...but if "deli" makes you feel better about it, "deli" it is.

I think it would be neat to have a little corner grocery downtown like back in the late 50s early 60s. And by that I mean at a corner. Where walking both directions on the sidewalk you can look through plate glass windows and see the operator/owner working either behind the register or fresh meat counter. Have all the staple groceries needed, Deli bar if wanted.
Post daily or weekly specials on the windows like back in the day.
Just the look of a butcher walking around in his white hat and smock getting to know his new and regular customers as the days of old would be cool.
Something to bring back that simple time in Tulsa life as some of us remember.