Playing catch-up: TravelCenters of America kick-starts franchising
Converting existing truck stops to TA model preferred to building from the ground up
TravelCenters of America (NASDAQ: TA) is pulling the franchise lever to grow its presence on the highway map.
Actively pursuing franchisees to take over existing truck stops is one of CEO Jon Pertchik’s approaches to growing the TA, Petro Stopping Centers and TA Express travel center brands. A new TA Express franchise opened Wednesday in Mount Vernon, Texas.
“The competitors have been eating our lunch in the last few years in terms of adding dots on the map,” Pertchik told FreightWaves in a March interview. Converting existing good-quality independent truck stops in great locations to the TA model is the most efficient way to close the gap, he said.
Long way to go
By the numbers, that gap is large.
Westlake, Ohio-based TA has about 260 locations in 44 states and Canada. Pilot has 750 locations in 44 states and six Canadian provinces and ranked No. 10 on the 2019 Forbes list of America’s largest private companies. Love’s has more than 500 truck stops and convenience stores in 41 states and ranked No.17 on the same list.
“It’s a great alignment of interests,” Pertchik said in the interview. “The independents don’t get access to the big fleet business. By working with us, they do. The flip side is we can be even more successful in serving our fleet customers by having more dots on the map.”
Said Robert Berkstresser, franchise principal of Petro Stopping Centers in Raphine, Virginia, and the TA in Lexington, Virginia: “If you want to compete, you need to be aligned with a successful brand.”
New agreements
TA has signed 18 new franchise agreements under its travel center brands since the beginning of 2019. All are expected to be open by the first quarter of 2021. TA also is negotiating franchise agreements for 13 travel centers in Western and Southern states. It is in later-stage discussions with six locations and has more than 80 other potential franchisees in the pipeline.
Pilot and Love’s are not waiting for TA. Pilot plans 20 new locations this year and 20 more in 2021, CEO Jimmy Haslam said in February. Love’s plans up to 40 new stores this year on top of 29 opened in 2019.
The franchising push is part of a May 1 reorganization in which TA laid off 130 corporate office employees and hired senior vice presidents to oversee business development, information technology and a newly created hospitality department to oversee consolidation of restaurants, gaming and convenience stores.
“Franchising is a key driver for the continued expansion of the business,” Pertchik said. “We believe putting the accelerator on this aspect of operations will allow us to become a growth engine and serve more customers and communities.”
Third generation
Some of TA’s franchises are now run by the grandchildren of the original franchisee, said Dave Raco, TA vice president of Franchise Operations.
“They stay with us,” he said. “We are recognized for our nearly 50 years of business success in the industry, and independent operators around the country are excited to become our partners to share in the same experiences.”
TA was foolish to let Pilot and Love grow; where Pilot / Loves sell cheap fuel to mega fleets; but don’t have enough parking; so drivers park at TA even though they fuel elsewhere. If I were TA, I’d charge for all parking, maybe $6, in all areas where parking fills up. $8 for all spots is better than $16 if you’re not lucky enough to get there early. Also, give credit towards this parking fee for fuel , shop, store purchases.
It’s got to be tough to decide whether to keep building truck stops. Self driving trucks are likely definite. What happens to all these truck stops if, say, 50% of OTR trucks go driverless? The driverless trucks don’t eat, nor need to park; and they’ll likely have enormous fuel tanks; where fueling enroute is not necessary. So, smart move by TA to franchise out the growth.
If I were TA, I’d start now figuring out how to capitalize on self driving trucks. TA, with its much larger lots / maneuverability, and full service repair shops, is in excellent place to be THE truck stop partner of self driving trucks. If I were TA, I’d offer a way to do a human “pre trip inspection” every time driverless truck pulls in for fuel. Fuel attendant can fuel, and while fueling…. check tires, oil, lights, etc.
I’d also work to hurt Pilot, Loves “retail minus” bullshit fuel discounts (their lousy). Since TA offers lots of “cost plus” discounts, even available to small fleets like me; why not drop retail down .25/gallon; and win lots of fueling from Pilot, Loves who only give retail minus 10, etc. TA is capable of kicking ass; just hasn’t done it. I, as small carrier have seen how some truckers “expect” free parking even if no purchases. This is ignorant expectation; as TA pays $M’s for those lots. Why should they give away spots for free? That’s stupid.
As small carrier; we despise Pilot; and all (Schneider) that enabled it; especially after the cheating scandals; where small carriers (who didn’t take time to verity discounts) were being cheated out of these discounts. Pilot, Loves are happy to sell fuel, sometimes for almost $1 more per gallon to small carriers (without the purchase power for volume discount programs) vs mega fleets. It’s terrible; no different harm to small carriers than the current spot market gouging by some brokers. It’s all legal; but the degree of legalized looting is offensive. Again, TA should drop retail down 20cpg; and then give free parking and shower for every 60 gal. This would make TA thrive on the hundreds of thousands of small carriers out there; who are not in any other discount program. Pilot can’t drop same way; since this would put their “retail minus 25 cents) customers at cost; or close. I envision working with various industry types to have small carriers get ALL the perks that mega fleets do; and these small carriers will clean house, far more than currently. It’s opportunity someone’s gonna get done; doesn’t matter who. Bound to happen. Mega fleets actively try to eliminate small carriers from getting similar perks. Legal, but there is free market way to put smack down on mega’s.