Fesco expanding network - Targeting 7 more stations by 2020 under adjusted business model
Published:Sunday | November 24, 2019 | 12:23 AMKarena Bennett - Business Reporter
In the six years since a quintet of local fuel dealers launched their own petroleum marketing business, Future Energy Source Company, they have built a network of 13 service stations, branded as Fesco, all of which are owned by their dealers.
By the end of 2020, they plan to add seven more to the chain, taking the network to 20 under an expansion programme that will test a new concept for Fesco as a “destination gas station”. Fesco will also own some of the stations, under a revision to its business model.
The first of the seven is slated for a 1.6-acre or 70,515 square-foot property in Old Harbour, St Catherine. Then by the second quarter of 2020, Fesco plans to launch another ‘destination’ complex at Ferry in Kingston.
Around three or four of the new stations will be designed under this concept.
Fesco, which is owned by Lynden ‘Trevor’ Heaven, Hugh Coore, Errol McGaw, Junior Williams and Trevor Barnes, has declined to disclose the size of the investment being made to expand. However, Chief Operating Officer Jeremy Barnes said that since 2017, and up to end of 2020, the estimated combined investments by themselves and their dealer partners would be about $1.2 billion.
Fesco is the not the first dealer nor marketing company to build a commercial concept around a service station. That was the route chosen, for example, by the owner of the Texaco dealership at the corner of Old Hope Road and Mountain View Avenue, owned by Annette Wong-Lee, which built out retail and office space as part of a renovation of the complex and a reformation of its business model earlier this year.
Fesco Bodles in Old Harbour is expected to become operational by the first week of December. The station, which will become its 14th across Jamaica, will host the fuel marketing company’s first FYC branded supermarket, a juice bar, cafeteria, Scotiabank ATM, a fast food outlet and a GK One outlet to facilitate Western Union, Bill Express and First Global Bank transactions.
Fesco is aiming for a December opening to align with the yuletide holidays, which is the peak shopping season for Jamaica.
“We are about 85 per cent complete with the property. All we have left is paving and interior works,” said Barnes.
“We are excited about having our first Fesco brand of FYC supermarket. Usually we carry convenience stores and we upgraded to an ‘almost supermarket’ in Braeton, Portmore; but this Bodles station is a lot more than what we’re used to doing,” he said.
Both the supermarket and service station, which carries four pump stations, are expected to provide about 35 jobs for persons within the community.
Fesco Bodles is surrounded by the Longville Park Housing Scheme; Old Harbour, New Harbour Village, Bodles and Freetown. Traffic data indicates that on average over 10,500 vehicles pass the site in the 12 hour-period between 7 a.m. and 7.p.m.
“For perspective, this metric exceeds the Mountain View/Stadium intersection and is very comparable to the Oaklands, Constant Spring and West Avenue intersection,” Barnes said.
Incorporated in 2013, Fesco’s current footprint of 13 service stations spans Mandeville; Portmore, St Catherine; Rock Hall, St Andrew; Stony Hill, St Andrew; Angels, St Catherine; Duncans, Trelawny; Montego Bay, St James; Golden Grove, St Thomas and Lacovia, St Elizabeth.
Along with gas station operations, the marketing company provides both fuel equipment, and fuel supply to the construction and manufacturing industries. Its fuel is sourced from the state-run refinery.
Fesco currently operates a dealer owned-dealer operated business model, which means the stations that bear its name are not owned by the marketing company. Its investment in the network so far has covered the build-out of their partners’ fuel-related capacity and infrastructure, including tanks, pumps and technological systems, as well as training, safety systems and marketing of the service.
However, under its current expansion drive, Fesco is adjusting its strategy to include a company-owned, company-operated component.
“Gas stations operate on more than one model. Some are operated on company-owned, company-operated; dealer-owned, dealer operated; dealer-owned, company-invested and dealer-owned, company operated,” said Barnes.
“But for Fesco, so far the model mainly involves dealer-owned, dealer-operated, so the revenues are not necessarily for Fesco. We are adding to that model next year, which means that Fesco will invest and the dealer will operate the stations. That profit will be individually negotiated and that totally depends on the numbers,” he said.