HOUSTON -- Operating costs in the convenience channel are on the rise, as the just-released 2014 Convenience Store News Industry Report revealed. Sugarland Petroleum Inc. is well aware of this fact and recently completed a project that is not only reducing its operation costs, but also making the Houston-based retailer a better steward to the environment.
Sugarland contracted with Energy Efficiency & Sustainability Consulting (EES) in September to implement LED lighting and energy-efficient beverage cooler motors, controls, reflective roof coatings, variable speed cooler door heaters, and more at two of its convenience stores.
Both locations are in Houston and measure 3,000-plus square feet; one branded with Valero fuel at 8011 E. North Belt and the other branded with Shell fuel at 12261 Bellaire Blvd.
Although the project required a significant investment -- between $30,000 and $35,000 per site -- Hasan Zakaria, director of operations for the entire chain of Sugarland Petroleum stores, said the in-store improvements will pay all of that investment back and then some in less than three years, thanks to a massive reduction in annual energy costs.
The c-store retailer expects to save more than $15,000 per year in energy costs, which will go a long way to recouping its investment and containing the two stores' operating costs going forward.
"Our utility bill reduction has been about 32 percent [per year]," said Zakaria. "In 10 years, we expect a 136-percent net return on investment."
BENEFITS TO THE CUSTOMER
Aside from lower energy bills, implementing the EES-recommended solutions has yielded another large benefit for Sugarland: an enhanced experience for its customers.
"The stores now look like they are brand-new," said Zakaria. "The lighting is better and it's a better customer experience."
Thanks to the upgraded LED lighting, customers have told Zakaria's management team that they feel safer at the two stores, the director of operations added.
"Curb appeal is everything," he said. "Customers need a reason to come to our stores as opposed to the competition." Sugarland's chief competition in the area comes from Landmark Industries Inc.'s Timewise Food Stores and CST Brands Inc.'s Corner Store locations.
The consumer experience is also better inside the store. The LED lighting makes many items look better than before, especially in the cold vault, according to Zakaria.
"Before, we had items that looked like old items sitting on the shelf," he said. "Since [the upgrade], we've seen more of these products sell."
Sugarland's Church's Chicken and Burger King quick-service restaurants (QSRs) at the stores are seeing a benefit as well. "Air conditioning units can't keep up the heat generated when it's 103 degrees outside with 99-percent humidity" explained Faisal Nazir, CEO of Energy Efficiency & Sustainability Consulting. "With the new energy-efficient motors, we can recycle the air so that it is not being pulled from the outside. So, it's cooler in the QSR and the comfort level for the customer is increased."
For c-store retailers that cannot make the entire cash outlay to implement the LED upgrade upfront, EES offers financing at a low interest rate with no required down payment. State and local governments also provide rebates to retailers as a way to encourage them to make their sites more environmentally friendly, Nazir noted.
"Rebates are available for up to 30 [percent] and sometimes even 50 percent of the entire project [cost]," he said. "EES helps to procure these rebates for our clients."
Sugarland Petroleum owns 30 convenience stores, 20 of which are company-operated locations. The retailer is so happy with EES' work that it plans to install LED lighting in five more of its locations, as well as a truck stop in Dilley, Texas.