Introduction
One of the ways to expand company operations to new geographical locations and new markets is by ensuring a reliable supply chain. From this perspective, having a strong supplier is an essential strategy element that will ensure a smooth flow of operations, customer satisfaction, and competitive advantage in the target market. Since the FasTracks Convenience Stores company is currently searching for a coffee bean supplier to expand its operations to South Texas, it should prioritize the choice of a reliable and growth-oriented coffee bean supplier. The quality of coffee is essential for the competitive advantage of a convenience store since coffee is the most consumed beverage in the USA, with the majority of people seeking access to it on the go (National Association of Convenience Stores, 2018a; National Coffee Association, 2020). Engaging with a reliable and professional company with a young and creative team would be a successful contribution to the long-term development of the company’s facilities in the targeted region.
Our company, Big Bean Coffee Supply, is driven by the values of high-quality products and satisfied clients. Our mission is “to redefine the term “gas station coffee” by bringing a premium café experience to a convenience store near you.” A significant advantage of our start-up when viewed from the perspective of FasTracks Convenience Stores’ needs is that Big Bean Coffee Supply is a local Texas brand that has extensive knowledge of the geographical area and the target market particularities. Moreover, we are a young and ambitious team of professionals who will contribute maximum efforts and creativity to realize FasTracks Convenience Stores’ opportunities.
Overview of FasTracks
An accurate client overview is a cornerstone of the identification of proper solutions and recommendations. FasTracks Convenience Stores’ mission analysis, and the overview of its current operations, competitors, and market are presented in the following section. Furthermore, the identification and analysis of the company’s problem and needs are addressed to ensure the accessibility of all data necessary for a well-developed and justified problem-solving strategy. The identification of these essential elements will provide a solid basis for consecutive market analysis, SWOT analysis, alternatives overview, and recommendations.
FasTracks Mission
FasTracks Convenience Stores is a large Texas-based chain of facilities that combine convenience stores and fuel islands. The stores are located in different small cities and areas of East Texas, Louisiana, and coastal Mississippi. The company strives to provide high-quality services to the target market in small areas where competition is insignificant. This strategy is beneficial since the accessibility of and short travel time to convenience stores in rural areas and small towns ensure customer convenience and guarantee active client flow (National Association of Convenience Stores, 2018b). The mission statement of FasTracks Convenience is “to be locally focused on the needs of each market while employing the resources of a chain for superior execution and service in each community.” Such a well-structured and refined mission statement allows for distinguishing such values as customer satisfaction, community-focused operations, and performance excellence. All of these values coincide with the values of Big Bean Coffee Supply which envisions its organizational culture in exceptional responsibilities execution, a high level of corporate ethics, and supplying products to clients with a strong strategic direction.
When comparing the mission statements of the client and Big Bean Coffee Supply, one might detect a fundamental similarity in the prioritization of the products of high quality made available to small communities, which is thought to be a pivotal element of successful convenience stores (National Association of Convenience Stores, 2021b). Moreover, the client integrates both fuel station and convenience store into one conceptual facility that serves the needs of the communities and target markets. In this regard, Big Bean Coffee Supply might fit the supplier requirements of the company since our purpose is to ensure that gas station coffee should be a delicious and high-quality beverage capable of attracting customers and cultivating a unique culture of company-customer relationships.
FasTracks Operations
The analysis of company operations is a crucial step in the company overview since it provides information about the company by identifying potential areas for improvement or seeking opportunities. Currently, FasTracks has 100 convenience stores in the areas of East Texas, Louisiana, and Mississippi. It mostly operates in the small a medium sector by opening its stores in small cities and towns. The consideration of the client’s operations predetermines its vision for the currently implemented project and helps the prospective partner foresee the potential cooperation insights. In order to better analyze company operations, it is important to analyze the competitive environment by overviewing industry statistics.
The convenience store industry is well-developed in the USA and contains multiple companies that operate in the same category as FasTracks Convenience Stores. Overall, when defining the industry, the convenience store is “a retail business with primary emphasis placed on providing the public a convenient location to quickly purchase from a wide array of consumable products (predominantly food or food and gasoline) and services”( National Association of Convenience Stores, 2021b, para. 12). This sector occupies a significant share of the retail economy and is characterized by high competition since there are over 150 thousand convenience stores in the USA, 80% of which sell fuels (National Association of Convenience Stores (2021a). Figure 1 presents a concise overview of the main statistical data on the convenience store industry in the USA as of the year 2020.
According to the statistical data about the industry for the year 2020, there were 150 thousand convenience stores in the United States, generating a total of 648.8 billion US dollars per year (Statista, 2021). On average, one store accumulates 1.5 million US dollars per year in in-store sales. The statistical datum most appealing to FasTracks Convenience Stores within the context of the currently addressed project is the sales of hot dispensed beverages by the stores, which reaches 7.63 billion US dollars and accounts for 3.2% of all in-store sales. Regarding the abundance of products and services available to the customers in convenience stores, such a percentage deems significant in profit-making and image-building perspectives and is justified.
Another significant aspect of industry analysis is the overall consumer behavior of convenient store clientele. According to the latest research, “sales at gas stations rose 2.5% in June over May as Americans took to the road, but they also spent more at the pump to fill up (Convenience, 2021). Moreover, the consumption behavior of the customers of convenience stores differs from those shopping in malls or dining in restaurants. In particular, convenience store clients value time spending about 3 minutes in a store, visiting the nearest convenience store, and consuming purchased products within one hour (National Association of Convenience Stores, 2018b). Notably, committed drivers constitute the core of convenience store clientele since 28% of fuel purchasers shop “daily” or “multiple times per week” at a convenience store (National Association of Convenience Stores, 2018a, p. 1). Thus, the expansion of FasTracks Convenience Stores operations in South Texas matches the trends in consumer behavior and industry particularities.
Figure 2. Leading companies in the industry. Sources: Convenience Store Products (2021), Dun & Bradstreet (2021a, 2021b), Vault (2021)
As the overview of some leading companies in the convenience store sector demonstrates, the majority of entities operate within a large number of branches and stores, which allows for covering a significant market share (Convenience Store Products, 2021). 7-Eleven remains the leader among its competitor operating 11,800 stores in the USA and Canada only (Vault, 2021). However, these competitors mostly concentrate their facilities in large metropolitan areas, which provides FasTracks with an opportunity to occupy small and medium-sized towns and cities. This observation goes in accord with the client’s mission and goals and will allow for obtaining a solid competitive advantage in the identified community-based sector.
The analysis of the annual revenue of the companies operating on similar terms to FasTracks demonstrates that 7-Eleven occupies a leading position, generating over 18 billion US dollars per year. Circle K’s revenue is 1.78 billion US dollars, and Speedy Stop’s reaches around 43 million US dollars (Dun & Bradstreet, 2021a, 2021b; Vault, 2021). Overall, the growing profitability of convenience stores indicates the positive changes in the industry as a whole and might be viewed as a positive developmental factor for the client.
Among the reviewed companies, two, namely 7-Eleven and Circle K, operate in multiple countries around the world without concentrating their marketing strategy precisely on the USA-based customers. Indeed, 7-Eleven operates in over 15 countries, and Circle K has stores and branches in more than 20 countries of the world (Dun & Bradstreet, 2021a; Vault, 2021). Such a trend demonstrates that large competitors prioritize their efforts regarding globalization and overseas expansion with the niche of local community-based stores being available to small domestic ventures. Moreover, while large enterprises engage in partnerships with numerous brands, they might lose the quality of relationships and fail in maintaining a brand-based identity. In this regard, FasTracks might obtain the benefit of refining its partnering brands through a meticulous selection of local suppliers who would improve the company’s image as a Texas store.
When overviewing the client’s market, one should re-emphasize that FasTracks primarily operates in smaller cities and towns, thus leaning to less intense competition. FasTracks seeks to become a part of neighborhoods by crafting its store designs and brand partnerships. In terms of target market demographics, the client aims at coffee-shop/restaurant consumers, at-home coffee users, and commuters of both genders and all ages. Considering race, the White, Asian, and African American populations are prioritized since they constitute the majority in the targeted region. Indeed, while White Americans are the highest number in the state, the number of Asian individuals in Texas is the highest among all US states (City-Data, 2021). Population with a median household income is targeted as FasTracks’ desired market, namely with an income of around 50,000 US dollars (City-Data, 2021). Customers with high-school education are the priority in terms of the target market, while bachelor’s degree holders are also included in the target population (City-Data, 2021). As for the psychographic data on the target market, FasTracks aims at meeting the consumer needs of those consuming coffee daily, commuting to work, and those preferring local brands.
FasTracks Problem
When a company is on the verge of a change, it faces multiple challenges that are centered around one problem. The client’s problem is related to the currently implemented project aimed at opening new stores in South Texas. The issue is related to the requirements of engaging in a partnership with a coffee supplier who would perform as an independent brand but on favorable and efficient terms with an emphasis on local culture. FasTracks’ overall mission concerns the needs of each local market, which is the pivotal aspect of the currently addressed problem. The task for the company at the moment is to find a local South Texas-based coffee supplier with knowledge of the domestic market. It should be providing a high-quality product capable of attracting consumers and building a unique identity for South Texas’ FasTracks Convenience Stores. The client is ready to cooperate on several alternative terms. Firstly, cooperation with vendors who sell coffee supplies outright to FasTracks and service brewing equipment. Secondly, FasTracks might partner with a vendor who leases space from Fastracks and is responsible for operating a coffee shop. Thirdly, the client might initiate joint ventures with a vendor to operate a coffee shop. All these alternatives might be a solution to the problem. However, to resolve the issue and help the client use its opportunities, one should review the company’s needs and analyze them in the context of the reviewed project.
FasTracks Needs
As it has been stated, the company seeks to expand its operations to South Texas. For this purpose, it requires engaging in partnership relationships with a supplier of coffee to ensure high standards of customer service that will be achieved through exceptional coffee beverage quality. These consumer-oriented tactics will contribute to the brand’s uniqueness and help differentiate FasTracks Convenience Stores from its competitors. Figure 3 shows the hierarchy of clients’ needs ranging from a more general organization-level on the top of the pyramid to more project-specific at the bottom. The visualization of these needs allows for clarifying the strategic priorities of the company and identifying the ways in which partnership with Big Bean Coffee Supply will help FasTracks achieve its short- and long-term goals.
FasTracks Convenience Stores is currently in a position of change that requires new cooperation and partnership and necessitates proper needs identification. The overall organizational goal of FasTracks is “to be a dominant convenience store brand in each FasTracks market.’ This goal is associated with the need to identify specific market segments and their respective expectations that the company should meet through performance adjustment. Furthermore, to be a dominant brand, FasTracks should examine the external factors in general and competitors available to the customers in the region to find feasible and efficient solutions to gain a competitive advantage.
A specific goal of FasTracks Convenience Stores is to partner FasTracks seeks to partner with a coffee supplier from South Texas “whose offerings are targeted to regional preferences.” The client needs to find a partnership with a supplier capable of differentiating FasTracks from competitors and building a “distinctive regional identity.” Precise identification of local particularities and knowledge about the target market that Big Bean Coffee Supply possesses will be a reliable background for a fruitful partnership.
Executive Summary
FasTracks Convenience Stores’ can significantly increase the profitability and competitive advantage of its newly opened facilities in South Texas by leasing store space to Big Bean Coffee Supply. Such a mode of cooperation with the local coffee provider is beneficial in both monetary and non-monetary terms. The research into the coffee consumption trends within the context of the convenience store industry revealed that high-quality beverages attract customers and enhance their loyalty. Moreover, the all-Texas cooperation team will allow for advancing FasTracks’ store culture toward community-based local store values.
The proposal has been developed on the basis of an analysis of current and recent data retrieved from reputable and credible sources. The analysis of the industry has been conducted using statistical data published by the National Association of Convenience Stores, National Coffee Association, Statista, and Vault. Demographic data was supported by the latest census findings and Texas’s official state profile. Overall, the research into the alternatives for the cooperation between FasTracks and Big Bean Coffee Supply has been carried out using reliable methods of SWOT analysis, market analysis, alternative assessment, and informed decision-making.
The analysis of the collected data is presented in the following sections of the report:
- Introduction. The overview of FasTracks’ needs and the problem is considered in the context of the convenience store industry and consumer behavior trends. Justification for the benefits of cooperation with Big Bean Coffee Supply is provided.
- Market Analysis. The data about the target market is analyzed according to the client’s goals and expansion plans. The demographics of Texas’ small cities and towns as the target market of FasTracks is overviewed in-depth. The population of White, Asian, and African American commuters and coffee-drinkers with an average income of 50,000 US dollars is justified.
- Discussion of Alternatives. Three alternatives, namely supply agreement, lease agreement, and joint venture, are discussed and assessed. The assessment criteria include start-up costs, operating costs, medium, labor requirements, risks, marketability, profitability, and payback. Given the lowest costs, the lease agreement alternative is selected.
- Conclusions and Recommendations. The choice of the alternative is justified by the high quality of product, reliable cooperation, cultural and economic benefits of a Texas-based supplier, and the compatibility of the cooperation strategy with industry trends.
- Implementation Plan. The implementation plan for the signing and managing of the lease agreement between FasTracks Convenience Stores and Big Bean Coffee Supply is outlined with the rent fixed at a monthly rate of 1750 US dollars.
Based on the outlined findings, the client is recommended to engage in a lease agreement with Big Bean Coffee Supply when expanding into South Texas. By means of such cooperation, FasTracks will enhance its position as a leader in the convenience store industry in Texas, with Big Bean Coffee Supply being a dominant brand in the FasTracks market. The high-quality beverages provided by a local and reputable supplier will ensure customer loyalty and satisfaction, which will ultimately produce a sustained profit.
References
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Dun & Bradstreet (2021a). Circle K Stores Inc. Web.
Dun & Bradstreet (2021b). Speedy Stop Food Stores, LLC. Web.
National Association of Convenience Stores (2018a). Three insights on frequent convenience store customers.
National Association of Convenience Stores (2018b). Time to shop: Consumer insights on how convenience stores deliver quick shopping experiences.
National Association of Convenience Stores (2021). Convenience stores offer more convenience.
National Association of Convenience Stores (2021b). What is a convenience store?
National Coffee Association (2020). Infographic: American coffee consumption 2020.
Statista (2021). Convenience stores in the U.S. – statistics & facts.
Vault (2021). 7-Eleven, Inc. Web.