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VOL. 122 | NO. 211 | Tuesday, November 6, 2007

Not Your Mama's MAPCO

Gas station chain moves up in the world with higher-end approach

By Andy Meek

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ALL JUICED UP: MAPCO Express Inc. is developing two new MAPCO Mart store locations in Memphis. The stores are prototype units and examples of the new upscale brand created by MAPCO. Shown is the MAPCO Mart in Lebanon, Tenn. -- Photo Courtesy Of Mapco Express Inc.

When most people think of convenience stores, what probably comes to mind are grab-and-go outlets housed in drab and often threadbare accommodations.

But starting this week, MAPCO Express Inc. will begin tearing down the MAPCO store at 1691 Poplar Ave. to make way for a revamped version of its traditional convenience stores. That's where MAPCO is building for the first time in Memphis a MAPCO Mart, the chain's upscale store prototype, which includes a food concept similar to that of a fast-casual restaurant.

For uptown girls

Less than a block to the west of the former Burke's Book Store on Poplar, the new MAPCO unit will include modern lighting, either a brick or stone facade, stained concrete floors and an exposed ceiling. With an interior bathed in warm tones and a visually appealing product mix, the store's GrilleMarx area will include touch-screens on which customers may place their orders.

The rebuilt store will have expanded to 4,250 square feet from the original unit's 1,000 square feet. All of those elements comprising the new store model were developed over the past few years, said Paul Pierce, vice president of marketing for MAPCO Express.

Ideas were culled from market research and company feedback, including the opinions of everyone from executives to clerks.

"It's a much more upscale store, and it's designed to attract more females and more business professionals," Pierce said. "However, our goal also is to continue to draw what we see as the typical convenience store customer, which would be a male, blue-collar, 18- to 35-year-old."

No more breakaways

MAPCO's new food concept GrilleMarx will offer menu items such as hamburgers, cheese steaks, wrap sandwiches, french fries and onion rings. The store's drink area will include more cold beverages, milkshakes and a mix of 10-15 hot drinks. Coffee will be brewed fresh every half hour.

The chain decided to roll out its own food concept after a certain level of frustration with housing established chain operations such as
Subway inside its convenience stores, Pierce said. What MAPCO typically has encountered is when, say, a Subway finds that it's doing well in a particular MAPCO location, Subway will then build a free-standing store close by.

Once construction begins, it should take about 120 days before the new Memphis MAPCO store is opened. Pierce said MAPCO also will be watching closely its eventual operation there.

"The store on Poplar sits on six-tenths of an acre, so that's a critical location for us," he said. "If we can put one of these on six-tenths of an acre without creating too much congestion and traffic issues, that opens up the door to a lot more locations. Starting out, we thought we needed about an acre and a half for these."

Gradual rollout

MAPCO Express Inc. is a subsidiary of Delek U.S. Holdings Inc., an energy business whose retail segment includes ownership of its network of MAPCO stores. Delek U.S. Holdings Inc., in turn, is owned by Delek Group, an energy conglomerate based in Israel.

In a recent presentation at the William Blair Small Cap Growth Stock Conference in New York, Mark Miller, an analyst with William Blair & Co., said Delek has been growing rapidly.

"What we really admire about Delek is the way they run the business," he said. "I think they've shown themselves to be very good operators, both on the refinery side as well as with the convenience stores."

MAPCO's goal is to build between six and 10 of the new store models each year. Another MAPCO Mart has been planned for the Memphis area and will be built at 6859 U.S. 70 in Bartlett.

The concept is about two years old, with the first of the new stores built in Nashville starting in 2005.

"Every location we have is not suitable for this concept," Pierce said. "But we do intend to look at all of our stores and start to change the imagery over to this type of a look."

PROPERTY SALES 71 233 2,852
MORTGAGES 74 171 1,954
BUILDING PERMITS 125 894 6,595
BANKRUPTCIES 34 206 1,183