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May 01, 2009
With the acquisition of 43 ExxonMobil On the Run stores in the Greater Phoenix market, coupled with the assumption of franchise contracts covering some 450 On the Run stores, Alimentation Couche-Tard Inc., North America's second largest c-store chain, has further strengthened its positioning in the convenience store market. This acquisition of On the Run, by the owner of Circle K reminds me of the White Hen Pantry acquisition by 7-Eleven a few years ago.
White Hen Pantry operated about 250 stores, all franchise owned and in Chicago and Boston. 7-Eleven acquired WHP Holdings in 2006. Today most Chicagoland White Hen's have been converted to 7-Eleven's. A few White Hen's remain, but will be converted as leases expire. This was a bold move by 7-Eleven, and it has made 7-Eleven the convenience store in Chicago.
Ask a Chicago resident to name a convenience store, they will more then likely name 7-Eleven, and could probably give you an exact store location which they visit regularly. I shop at the 7-Eleven on Taylor Street, just east of Ashland. It is a converted White Hen Pantry. This was a crafty move by 7-Eleven, as they bought the only other significant c-store brand in the Chicago market, and now dominate this enormous market.
Couche-Tard operates over 5,000 stores, and most of these are company owned. They have a significant franchising division as well. Couche-Tard is a Canadian company which acquired Circle K in 2003, and they are headquartered in the province of Quebec. Though they tried to bring Mac's to the US, the 2003 acquisition of Circle K was done for the specific purpose of owning and operating a recognizable brand. Canadians are familiar with Couche-Tard, Mac's and Becker's.
Couche-Tard has been growing through acquisition,and if the chain they acquire has a significant market presence, they have enhanced the chain, rather then convert it. Is this done from necessity, as Couche-Tard is a French Canadian company? Maybe. Regardless, they have done a wonderful job of analyzing the market needs prior to making changes that could create a negative impact on store sales or customer retention.
It makes sense that these 43 Phoenix On the Run locations will be rebranded as Circle K's, and it should happen pretty quickly. Phoenix is the original headquarters of Circle K. The other 400+ On the Run's are primarily found East, which is not as significant a market for the Circle K convenience chain as the West, South, and Southwest. Strategically, are they going to start acquiring or building out stores, and brand them Circle K, or will they operate On the Run as an East Coast c-store chain? Will On the Run franchise owners prefer to be Circle K franchisees?
We have seen Circle K start to move into the Midwest, and we have a few here in the Chicagoland area. With the 7-Eleven acquisition of White Hen, our city has become a 7-Eleven town, and effectively removed any established acquisition target's from our market. Couche-Tard understands how to operate locally relevant store brands. I don't think it is a certainty that these East Coast On the Run's will be converted to Circle K c-stores. It will be interesting to see what happens.
April 30, 2009
"The way they worked was that the boss, Paulie, would start a business or join a business as a partner and buy things on store credit, but never pay for it. They would sell everything they bought out the back door at a discount. Once they had borrowed all the money from the bank they could and were out of money they would burn the place down for the insurance. It did not matter that they sold products for less than they bought them for since it was all profit because they never paid for anything." Henry Hill from Goodfella's, 1990.
Chrysler is in the hands of the UAW and Fiat. This is weird, because I thought Fiat was gone, and everyone blames Union's for companies failing.
Chrysler created the mini-van. The mini-van is a franchise. I know it is a product, and a brand, but the mini-van is representative of a system. The mini-van is the soccer mom is the American middle class. A system, can be franchised. A couple of NJOY NOW soldiers have kids and drive mini-vans. They are both Honda Odyssey's. Good work, Honda. Shame on Chrysler. What happened?
Chrysler manufactures Jeeps. Jeep is an institution. Every American has owned a Jeep, or has at the least been in one, many times. Jeeps are as patriotic as military vet's and baseball. Jeep is a brand, and Jeep dealers make a wonderful living on their franchises.
Mercedes and Chrysler "partnered," before Daimler-Benz gave Chrysler to Cerberus. Why did Mercedes decide it was better to sacrifice an American auto maker then use them to build their business beyond the luxury market? Chrysler is an American franchise, and the greatest luxury automobile brand in the world, Mercedes shredded it, then walked away.
Why have we allowed Fiat!?! to acquire Chrysler? How many Americans have heard of Fiat? How many humans (American's, German's, Italian's) even realize Fiat exists? The next Alfa Romeo I see on a Chicago street will be the first Alfa Romeo I have seen in 10+ years. Why are they involved in the bankruptcy and restructuring of an American automaker?
If Chrysler needs a partner in the automobile industry, and no doubt they do, why Fiat? Couldn't we engage, convince or bully a Toyota into this? What about Hyundai? There are companies that are forward thinking that actually sell cars to Americans that might actually help Chrysler fight out of this mess. Companies like Toyota and Honda are franchises, and brands that represent quality, safety and efficiency. What does Fiat mean to an average American?
I've bought Chrysler's, and have liked them. We own a Jeep Cherokee now. We all have owned or know someone that owns a mini-van or Jeep. Why couldn't we find a management and finance solution that was more viable then what Mercedes did? Mercedes neglected a fine company, then handed it/Chrysler off to a venture capital firm, Cerberus, and walked away. Cerberus was not an auto maker or marketing company. Name a Cerberus brand or franchise? Now name one automobile made by Fiat?
Are we letting businesses like Fiat take the booze out the back door, while setting the building on fire?
April 30, 2009
Senator Specter is a US senator that represents Pennsylvania, and Philadelphia. I think this is an interesting move on his part. Senator Spector feared he was going to lose the primary election to a Republican, who was more right wing conservative then Senator Specter. This move puts him in a position to keep his seat in the Senate. If he remains a Republican, which is the minority in government, and Pennsylvania, he may have lost the primary, and the Republican that won, would have virtually no chance of winning the senatorial seat.
Politics is Arlen Specter's business, and this was a business move. He wants to keep his business going, rather then retire, or find a new political office. That is the reality behind this switch. There is no reason a person's or Senator Specter's political affiliation should influence their beliefs, or their vo. To hold his office, Senatort Specter had to make a choice. Risk losing a party primary, and not get to compete for his seat, or negotiate a position with the Democrats, and switch teams and beat the Republican candidate from Pennsylvania.
Another thing I find interesting about this political party inversion, is our political system is set up as a two party system, which is to narrow for true competition. Countries, like Canada have candidates from 5 or more parties, which offers a broader choice, and a more competitive government. I would think our country would benefit by 30 members of the senate creating a new party. Politics is a business, so this will not happen. To win, you have to play for one of the professional teams, Democrat or Republican.
We sometimes need to remind ourselves why these men and women are in politics. Obviously they want to contribute, on some level. They also want to make money, satisfy their ego's. They want to influence policy. Politicians want to be on top, they want to be in charge, they want to win. These traits lend themselves to working within systems that have proven track records of success. This is the two party system. The Democratic and Republican parties are franchises. They are systems that produce political candidates that win office.
When we roll out products, like the NJOY NOW card, we must consider barriers to entry, and systems that will help our product succeed, like franchise systems. Arlen Specter is a brand name product that needs the Democratic franchise, party to sell. Right now, Barack Obama and his Democratic franchise, party is the big dog. The McDonald's and 7-Eleven of politics all rolled in one. Switching parties may not change the way Senator Specter votes on issues that relate to Pennsylvania or our country, but it will change his reach, and give him a chance to win an upcoming election. This was a sound business move.
April 28, 2009
Reported April 21st, 2009 by Crain's Chicago Business. Playboy Enterprises, Inc. was told Tuesday its shares have failed to meet the New York Stock Exchange’s listing requirements.
The publisher of Playboy magazine has had an average market capitalization below $75 million over the past 30 trading days and less than $75 million in shareholders’ equity. Both thresholds must be met to be listed on the NYSE.
Chicago-based Playboy has said it will submit a plan within 45 days detailing how it will raise both its market capitalization and shareholders’ equity over the next 18 months to meet the requirements.
The company’s shares, which fell 13 cents on Monday to close at $2.08, will remain listed on the NYSE if its plan is accepted.
Playboy’s stock has fallen 76% in the past year as the multimedia company struggles to make money in the face of shrinking advertising revenue. It posted a $156-million loss last year, which included $153 million in asset impairment and restructuring charges. It has made aggressive cost cuts in recent months, including consolidating offices, eliminating corporate holiday cards and choosing a less expensive paper stock for its magazine.
Christie Hefner daughter of founder Hugh Hefner, stepped down as CEO in January. Jerome Kern, a consultant and former head of California-based telecom On Command Corp., is interim CEO as the company looks for a successor to Ms. Hefner.
April 24, 2009
It may seem like ancient history now, but not long ago the mortgage industry was turning ordinary people into millionaires. Real estate, and mortgages in particular was a late nineties, early 2000's global phenomenon that nobody ever anticipated ending, or even slowing down. How quickly fortunes are lost, and entire industries are eliminated.
Real estate investing became an obsession. How often was "you can't lose in real estate," repeated? This obsession nurtured an abandon that drove people into investments and projects that they were not prepared for. Our banks and mortgage industry was encouraging reckless borrowers, and rewarding lenders that continued to originate new business.
Management and evaluation of risk is a major part of any successful real estate investment strategy. Risk occurs in many different ways at every stage of the investment process. Real estate was once considered risk free investing, when in reality, without knowledge, experience or preparation, real estate can be a very poor investment. The price of the property, with the leverage involved by the need to borrow to make the investment, or purchase does not lend itself to risk free investing. Without experience and knowledge earned by having worked in real estate for years, you are at a disadvantage.
Now lending is continuing, and the majority of us NJOY our homes, and we live in them. This is still a large investment, but one we can and do manage. Sub prime lending and the mortgage backed securities have hurt banks, and funds, but we will still buy homes. We are just watching people that should only own one home, stop speculating on buildings, and markets that they do not work in, or understand.
This recession may not be gentle, but the real estate bubble has burst. This is an economic challenge we will survive. Many of us will be stronger. On a personal level, it as refocused a lot of friends, colleagues and myself. Focus on what we know, and what we know will reward us. The "get rich quick," mentality of real estate novices attracted to stories of success flipping homes has ended. I believe now is the time for all of us to get back to the slow and steady work and rewards of building businesses that yield revenue every day.
April 22, 2009
Earth Day and business are not independent, they are rather codependent. Obviously money and revenue can be generated in many different ways, but without a clean planet, we will not have anywhere to NJOY the fruits of our labor.
Earth Day 2009 is a global celebration and a day to spread awareness of people's destructive impact on the planet. But before you jump right in there and start changing the world on a massive scale here's a few simple things you can do to make a difference right now, tomorrow and every single day after that.
Here's my list of five things to do to celebrate Earth Day 2009 and reduce your impact on our planet, NJOY NOW style;
1. Plant a tree or two. Then have sex. NJOY.
A tree will absorb CO2 and other forms of pollution, provide a home to hundreds of creatures, help to create and retain soil and performs a whole host of other ecological functions. And, in case you needed a reminder, will leave a lasting legacy of your time on the planet.
2. Walk or ride a bicycle to work today.You'll feel better and the earth will be a much healthier place to live too. This will also help you have a better sex life, as it is healthier then driving.
3. Have we mentioned sex yet? Very good way to celebrate Earth Day.
4. Conserve electricity. Use your clapper and shut your lights off, and your TV too. Keep your computer logged into NJOY NOW, the Girl of the Month is coming.
5. Avoid bottled water. Tap water is safe, clean and cheap. It also reduces waste from bottles and delivery of bottles to our convenience stores.
I can add a 6th item here, which is far more obvious, and more fun then the 5 above. Use NJOY NOW for adult entertainment, rather then Playboy magazine. Consider how many trees you can save if you live a digital life, and NJOY, www.njoynow.com instead of any magazines? Back to sex.
So, if you've got business on your mind this Earthday, perhaps you should take a few minutes to look around you and realize how precious our planet is and how beautiful that small piece of turf is right outside your window. NJOY.
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