Chevron Initial Meeting, 9/11

Having the initial meeting with Chevron on 9/11 felt a bit weird.  It’s been 18 years but I still morn a little bit on 9/11; it’s always a somber day. In any event, we met.

The Chevron wholesale marketing structure is a little than Shell’s.  There were 2 reps from Chevron. Our headquarters is planned to be in Dallas so there was a guy that covers Dallas there. The store operations will be in East Texas so they lady that covers east Texas was there. My primary contact will be the east Texas rep. Kinda cool. I’ll explain later.

This was much more of a sales meeting right from the start. I took that as a good sign. They started out giving me Chevron starts, like #of stores in DFW and the number of stores in East Texas.  In both markets there are about 400-450 each, less than Shell and less than Exxon/Mobil. They told me about a 2019 refinery acquisition and the need for stores, locations for this new volume. At this point I exhaled, internally of course. There would be no need for the sales pitch if they weren’t interested in my prospective business.

Next was my turn to sell them on me and my business plans.  I talked about my family history in the business and my personal experience with the Conoco stores and the turnaround I was able to do there.  I even showed them before and after pictures of my raze and rebuild and the new construction of sites. They were impressed with my grasp of the business as well as with my plans.

So here is where the meeting went completely different from my meeting with Shell.

They started off by telling me that most of the sites had conflicts with existing Chevron stores planned Chevron store. They also indicated that they would offer the Texaco brand on 8 sites and we went through the list.

By the time of my meeting with Chevron the number of prospective stores I would be purchasing has settled on 14. So we had to reconcile our stores and they ended up with 7 stores that would carry the Texaco flag. That was exciting but that was leaving me 7 stored to figure out what brand they would carry or if I would even purchase them.

I thought for a minute while we sat there and a couple of things bothered me, one even kinda pissed me off but let’s get to that in a few.

One of the stores they left off was one that I thought had the greatest potential.  So I asked why it was left off. Here’s what they said.

First there is a planned Chevron store in the proximity to that store.  Most importantly,  my renovation budget wasn’t enough to make the store work. I had like $150,000 budgeted for parking lot redo, pump and tank replacement, and facade changes.  They looked at me like, ‘and?’

What I told them was this was a patch until we could raze and rebuild the store. We would completely reconfigure the site adding additional fueling stations and better truck, 18-wheeler access. Their response was, ‘oh, thAt changes how we will look at it. Put that one back on and will brand it Texaco.

That was a nice save but makes me have to change our approach,  at least for that one store. I’ll get to what we’re looking at on what day-1 would look like and our rebuilds would look like.

What pissed me off was the exclusion of what I will call ‘hood stores.’  These stores are located in primary people of color neighborhoods. Honestly,  these stores are fucked up, really fucked up, but, we can do the same type rebuilds that we can do with the other stores. These can be really high volume stores but people don’t think people of color have money to spend.

One of my best stores with Kokelbug was an unbranded ‘hood’ store. It was a cash-only kiosk that we operated as we were planning for the rebuilding.  We were leasing the store from what was then Diamond Shamrock.  The fuel was Diamond Shamrock but unbranded. It was our most profitable store, hands down. More about that on another page/chapter

Look, I am grateful that Chevron was talking about the supply contract so I wasn’t about to he all in my feelings a fuck up a good thing. If we can make this transaction work, I’ll be these stores and if I have to create a brand or find another major to agree to brand them so be it. I know those stores will work. Been there, done that.

Our conversation turned in a different direction,  kinda. We moved from discussing the stores, specifically to discuss the structure of the supply contract. This is when you keep your mouth shut and just listen. I got this from my grandfather,  my dad’s dad, ‘you cant learn nothing talking.’

So the guy starts out saying,  ‘I want to be sure that we’re transparent and that there are no surprises.’  That’s what everybody says right before you get fucked, every time.  He continued by saying,  ‘depending on volume,  we might offer you a sub jobber contract until you meet the volume requirements. That would be clearly stated in the agreement with specific volume expectations. We would automatically switch you to a direct contract when the volume requirements are met.’

In my mind I said, fuck that, but at the table said, ‘what is the volume requirement?’ I think he forgot that we already had this fucking conversation over the phone. I started all my conversations with all the perspective major oil companies the same fucking way, ‘what are the volume requirements for a petroleum marketing agreement?’ Everybody got the same question,  every fucking one. There would be no need for me to continue talking if I didn’t think we would meet the volume requirements.

He says, ‘the volume requirement is 10 million gallons per year.’ To his credit, that is exactly what he said over the phone. What he didn’t say face to face that he said over the phone was that they would give me time to get there as long as the growth an was in place. I didn’t wanna piss him off and remind him what he said, really for a couple of reasons.  First, we have. I have no idea what the volumes will be. They agreed that they would rely on the market studies that I would have done. The source I’m using for the studies is who they rely on or recommend.  Most major’s use IMST, who I will be using.

The other reason I didn’t spend too much time in this shit, I had this same conversation with Conoco before I got the deal with them. Shit, we didn’t meet the volume requirement but we were still able to get the supply contract.  We will with Texaco too.

The other thing that will work in my favor as leverage with them,  my private equity partners will not do the deal without the supply contract.  So we could be at 8 million gallons per year and Chevron is gonna walk away? I don’t think so. They would be fools. We have a growth strategy that will far exceed 10 million gallons per year.  I shared that with them.

We have a good plan and Chevron is comfortable with our approach. We have to continue the dialogue and get the volume information verified.  What I told that we would do is not change our volume projections until we got the results from IMST based on our renovation or rebuilding plans.

What’s next? I owe Chevron the revised list of stores that we agree on. In the profiles that I will provide, I need to update the planned renovation and raze/rebuild plans. They understand that the budgets will be pending estimates from contractors.

Our biggest challenge is not Chevron, it’s the seller.

We had an interesting light moment as we were wrapping up the meeting. The East Texas rep, my primary contact, asked how did I come up with the name Braeswood.  Braeswood Capital Corporation is the name of my holding company. All my other companies, the mortgage company, and the real estate development company are controlled by Braeswood.

I begin explaining that I lived in Houston for a brief time after college and there a part of the storm drainage system named Braeswood Bayou and I thought it was a pretty cool name. Before I could finish on how I adopted the name as the name of my company, she interrupted and said, ‘I was hoping you would say that.  I live off Braeswood and had only heard that in context with Braeswood Bayou.’ I told her I was shocked because of all the people that had ever asked me about the name, she was the only one that had a clue.

That was a good ending to what I thought was a very productive day.

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