It started more than 30 years ago with a car wash. Since then Verc Enterprises has been in and out of the auto repair and parts business, entered the convenience industry, and partnered with franchisors ranging from Dunkin Donuts to the Kabloom florist chain. But through it all, car washes have remained a constant. “Yet the role of car washes in our marketing strategy has evolved over the years,” acknowledged Leo Vercollone, president and CEO of Verc Enterprises, based in Duxbury, Mass.
The company now operates 20 convenience store sites along Interstate 495, a corridor that rings the exurbs of metropolitan Boston. Verc outlets sell Exxon or Mobil fuel products and range in location from Plymouth, Mass., in the south to Nashua, N.H., in the north. Vercollone still operates his two original stand-alone tunnel car washes. But now a third car wash at a c-store site is the vanguard of a new strategy.
“We exited auto parts and repairs, in part because we thought the c-store business would give us a better chance to expand our car washes,” he explained. “But now, with gasoline margins down and cigarette sales declining, we also see car washes as a way to generate another revenue stream at our store properties.”
The 31-year journey of Verc Enterprises starts with Vercollone’s father Eugene, who helped manage a supermarket and encouraged his oldest son Paul to find a good career. In 1975 father and son bought a local car wash out of bankruptcy, as Eugene was lured away from the grocery business by the chance to be his own boss.
“With our ethnic background, our family has a strong work ethic,” Leo Vercollone noted, “and so my father was the driving force for starting our own family business.” Leo entered the firm in 1977 after his graduation from Boston College. “My father and brother had a chance to acquire and reopen a local Exxon gas station,” he recalled, “and so they asked me to come into the business.”
Five years later the property of a former car dealership came up for sale. “Since we did repairs at our Exxon station,” he said, “we thought the facility would be large enough for us to have an auto repair, auto parts and car rental service.”
During the 1980s, however, automotive science advanced until most new vehicles came equipped with on-board computer technology. Repairs became more difficult to perform, as Verc needed to obtain specialized equipment, provide its mechanics with specialized training, and spend more time with customers to explain repair work.
By the end of the decade, when a small c-store with gasoline became available for purchase, the Vercollones decided to give it a try. The venture was highly successful. “But we also learned,” Vercollone related, “that even though a car repair shop and a c-store with gasoline are both auto related, they’re really separate businesses.”
The family decided that c-store merchandising offered more potential for expansion. So over an 18-month period during 1992-93, they exited the repair business by converting their body shop into corporate offices and leasing some of the space for a Dunkin Donuts restaurant. Making Change The partnership with the donut chain was serendipitous.
“The president of Dunkin Donuts lived in the our community,” Vercollone said, “and through my brother Paul he asked our opinion about the possibility of putting a Dunkin Donuts in a c-store.” In the late 1980s when the initial discussion took place, the concept was considered radical. “Since we were Mobil-branded,” Vercollone recalled, “we approached Mobil about the idea. But they wanted to protect their own brand name.” Yet the Vercollones persisted and, after a long wait, Mobil at last agreed.
By 1989 Verc Enterprises installed a 100-square-foot Dunkin Donuts kiosk in its c-store. “Three or four years later it was so successful,” Vercollone said, “that we gave Dunkin Donuts more space and added a drive-thru.” The partnership was expanded in 1993 when the company leased space to Dunkin Donuts at its converted central office.
Today, 14 Verc locations have a Dunkin Donuts. The expansion of Verc Enterprises into a 20-store chain has occurred over the past dozen years “as we’ve acquired stores one at a time, rather than by purchasing another chain,” reported Vercollone.
His company leases 15 properties and owns the other five. Most are one-acre sites that abut a major highway or exit ramp, and typically feature a 2,000-square-foot store and between four and six MPDs. Half of the sites are open 24/7, while all sites are geared for high-volume gasoline sales. The Verc chain prefers to sell nationally and regionally branded food items, rather than mounting its own proprietary foodservice program. Stores tend to be stocked with branded snack products rather than take-home items.
Among Verc’s branded partners are Dunkin Donuts, Subway, Kabloom and Hood dairy and juice products. But Vercollone’s latest store, built in 2002, is a harbinger of where his company is headed. The building features an ample 4,000 square feet of space and provides indoor seating, while the property boasts a touchless car wash. Experience has taught Vercollone that c-stores and car washes must also be treated like separate businesses.
“You can’t just install a car wash at a c-store,” he believed, “and simply add it to your store manager’s job description. Putting in a car wash isn’t like adding just another hotdog machine!” All in the Wash Having two stand-alone car washes and a c-store car wash affords Vercollone the chance to see and evaluate different technologies and marketing strategies.
“New England has severe winters and so cars get pretty grimy with dirt and salt,” he pointed out. “You need a degree of friction to get the car clean. So at our two stand-alone car washes we use friction technology but with soft cloth.” This approach has allowed Verc Enterprises to review new, softer materials for car wash brushes as they come on the market. “But we’re also aware that consumers are sensitive about their cars being touched and possibly scratched,” Vercollone continued. “So at our c-store site we installed a touchless car wash.”
The operation permits the company to evaluate touchless technologies and the effectiveness of different chemicals. The two types of washes, the stand-alone locations and the c-store car wash, afford Verc Enterprises experience in both attended and unattended operations. At the stand-alone car washes, whose 120-foot tunnels and conveyors can wash up to 900 cars a day, attendants accept payment and prep vehicles for washing. By contrast, the unattended c-store site has a capacity of 175 cars per day and employs a cash acceptor and credit-card reader at the entrance.
Remote polling, which Vercollone said is “really advancing,” allows the company to monitor its car wash from the central office and quickly pinpoint potential failure conditions. Dedicated employees from the central office also visit the car wash at regular intervals to ensure the unattended facility is well maintained.
Maintenance is a key to car wash success, whether at Vercollone’s stand-alone sites or c-store facility. “Car washes require a high degree of maintenance,” he explained, “because not all cars are the same and because the seasons differ, from washing off salt in the winter to bugs in the summer. And whenever you’ve got water, moving parts and gears, and cold temperatures all into one operation, you’re going to have problems.”
Knowing how to get help from car wash equipment vendors is vital, Vercollone said. “But you’ve also got to develop your own expertise,” he suggested. “For example, nobody wants to wash their car if your car wash looks dirty. But knowing when to clean and service your car washes depends on the level of usage, which in turn is affected by the time of year. There are certain seasons when you need more maintenance and cleaning.”
Another principle is the same at all three Verc Enterprises car washes, whether they are friction or touchless, attended or unattended. “The car wash business is all about maximizing your best car wash days,” stated Vercollone. “During rain and snow, there’s no car wash traffic. But after a snow, when you have a good weather day, the traffic at your car wash is huge.”
Vercollone’s car wash business is also driven by the distinctives of the Boston market. Real estate prices are high. Permitting is costly. Many Massachusetts localities have no public sewer lines, so that two of Verc Enterprises’ car washes must use water reclamation systems — which cost the company about $120,000 per site. And, like other operators around the country, he said credit-card fees are having a “severe” impact on his bottom line.
“Because it’s expensive to own and operate a car wash in our market, there aren’t a lot of car washes in our area,” Vercollone explained. “At the same time, people around Boston have higher incomes and a higher cost of living. So consumers expect and are willing to pay for a premium car wash.” Verc Enterprises prices its car wash services from $8 to $16, and focuses on drawing high-end customers. Though the company does little advertising, onsite employees are trained to sell — and upsell — car wash services.
Confident his company has built the needed expertise for operating c-store car washes, Vercollone is now preparing to expand the service. A second car wash is slated to open at a c-store later this year, followed by third site in 2007.
Facing the Future
In recent years Verc Enterprises has expanded its c-store chain by an average of three to five locations per year, though growth has more recently been slowed “by the fact it’s getting harder in our market to find those best sites,” said Vercollone. Like fuel retailers and c-store operators nationwide, Vercollone is facing competition from hypermarketers and other nontraditional channels. Gasoline prices offered by big-box retailers, he reported, “have a ripple effect through the market, even if my location is 15 or 20 miles away. Retailers within a few miles of the hypermarketer must adjust, and then other fuel retailers a few more miles down the road also have to adjust.”
As Vercollone has surveyed the competition, he has come to believe that “it’s getting harder to differentiate yourself as the retail landscape becomes more blurred. Yet on the other hand, the blurring of the channels might give our company the opportunity to sell some product categories that we haven’t sold before.”
Next year, in 2007, Vercollone marks his own 30th anniversary in the family firm. His father Eugene was active in Verc Enterprises for many years and passed away three years ago at the age of 90. “But from my dad,” related Vercollone, “I learned the kind of work ethic that it takes to succeed in the c-store and car wash business, in any generation.”