Loading ...A Former Egyptian Engineer Found the Secret to Building a big Northwest Gas-Station Chain
SOURCE: THE SEATTLE TIMES
BY: PAUL ROBERTS
If “Fixer Upper” did a spinoff on gas stations and convenience stores, the entire first season could be devoted to a Bellevue man named Sami Said.
For more than two decades, the former engineer from Egypt has made a career out of turning underperforming gas stations into cash cows.
Said’s formula is simple: He finds locations that are ideally located but poorly maintained, upgrades the equipment and the store, and institutes a spit-and-polish customer-service regimen. Even the handles on the gas pumps get buffed down regularly so that “the customer does not put his hand on something dirty,” he says.
The makeovers nearly always boost business. After Said took over the Shell station on Beacon Avenue South, for example, gasoline sales there went up 60%.
They’ve also turned this soft-spoken 62-year-old into one of the biggest independent gas-station operators in the Puget Sound region. The 34 locations he owns or operates as Emanuel Inc. — 22 Shells, 11 Arcos and one 76 — stretch from Puyallup to Bellingham, generate tens of millions of dollars in annual sales and provide jobs for more than 180 people.
In the process, Said has done something of a makeover of a culture cliché — the immigrant in the gas station — by making it into his own, distinctly American success story.
A sprawling gas-station empire wasn’t Said’s plan when he came to Washington from Cairo in 1986. He was mainly seeking religious freedom — his family is Coptic Christian, a sect long persecuted in Egypt.
But Said was also keen for economic freedom: After three years as an engineer with General Motors in Egypt, he was eager to try something new.
He had stints as a newspaper deliverer and maintenance technician. But his defining job was working at a fellow Egyptian immigrant’s gas station in Ferndale, where Said got a crash course in English and his first real chance to “understand the American customer.”
It wasn’t long before the former engineer, trained at “getting better efficiency for less cost,” was coming up with ways to improve customer service. It was also in Ferndale that Said met his wife, Brenda.
When he heard that the lease for a Shell station on Mercer Island was for sale, in 1998, he scraped together the $75,000 down payment, much of it from family and others in the local Egyptian community, and went into the business. Brenda chose the company name, Emanuel, which means “God with us.”
After a “very difficult” six months, Said settled into what would become his trademark strategy of experimentation and improvement. After repainting the store and sprucing up the property, Said polled his new customers on their product preferences — then spent precious capital adding things like hot-food items and higher-quality coffee.
Within a year, Said had boosted fuel sales by 50%.
When the local Shell representative, impressed by Said’s numbers, pushed him to take on another location, Said was dubious. “I told him, ‘I cannot run more than one store.’” The rep persisted. With oil prices then near historic lows, oil refiners were desperate for dealers who could move more volume. In early 2000, Said took over a Shell in Lynnwood.
Somewhat to Said’s surprise, his Mercer Island strategy transferred fairly easily to Lynnwood. One key factor: Said staffed his new location with fellow immigrants from his church, Saint Mary Coptic Orthodox Church in Lynnwood.
Three months later, Said took over a third station, in Everett. By 2003, he was running nine Shell stations. By the following year, he had 15.
In 2008, Said went from merely operating gas stations to owning some, after Shell offered to sell him locations in Beacon Hill, Fife, Kennydale and Parkland-Tacoma, for around $1 million each. Financing such a large deal wasn’t easy. Said was an immigrant businessman looking to buy into a volatile industry on the eve of the Great Recession. But with the help of a broker — another member of the local Egyptian community — Said got a loan and closed the deal.
As his enterprise expanded, Said added a small office staff and systems to manage the stations’ finances and the thicket of regulations and safety codes that govern the gasoline business.
But Said never lost his engineer’s obsession with efficiency and improvement — a useful trait in a business where high prices don’t always translate into high profits.
Gasoline is a surprisingly low-margin business. In the 1980s, discounters such as Arco began selling fuel at just above cost to drive sales of beer, junk food and other higher-margin items in their then-new convenience stores. This low-margin reality intensified in 1990s as grocery chains started offering at-cost gasoline to boost their own “inside” sales.
For much of the past two decades, the gross margins on gasoline — that is, the gap between what gas stations pay suppliers and what they charge motorists — has been between 5 and 10 cents a gallon, say Said and other retailers. And much of that margin goes to expenses such as credit card charges, which take around 2% of the total sale price.
The saving grace: the gross margins on beer, chips and other “inside” items are around 30% — and, for most gas stations today, are the biggest source of profit.
In such a marketplace, Said has hedged his bets. In 2010, he himself became a discounter with the first of 11 Arco stations, whose customers tend to prioritize cheap gasoline.
At the same time, Said stepped up efforts to upgrade his Shells, whose customers, generally are more tolerant of higher fuel prices if the location is super convenient and, especially, if it’s clean, safe and loaded with inside amenities.
Those amenities don’t come cheaply. Adding a new hot-food deli, for example, can easily run $30,000, plus another $50,000 in yearly labor, says Mike Leake, Said’s general manager. But the investments can pay off. When Said put in a deli at his Parkland location, overall store sales jumped 20%.
Said has also gotten better at finding potential fixer-uppers: stations with prime locations — preferably, busy corners in housing-dense neighborhoods — but poor upkeep. “All the stores we’ve had — they were so bad inside,” says Said with a laugh.
Community-based hiring
Once or twice a month, Said visits each of his 34 gas stations. He checks for general cleanliness and gaps on the product shelves.
Mainly, Said checks in with his managers and staff, many of whom are Egyptian immigrants looking for their own start in America. Many are referred to Said through his church or the local Egyptian American community; some hear of Said even before they leave Egypt.
“Sometimes they just get off the plane and come straight to us,” says Jennifer Hovey, Said’s accounts manager. Hovey says Said often helps the newcomers find an apartment and other local services, much as he was helped 30 years ago.
Such community-based hiring, which sociologists say is common in immigrant communities, also pays dividends for employers. It means Said and Leake can spend less time recruiting and interviewing, Leake says. It can also means dealing with fewer calls from store staff, who often bring problems to their co-workers instead. “If they have a question on anything, they might not even call me,” says Leake. “They’ll call the guy who brought them on.”
In some respects, Said’s success is simply a larger version of an increasingly common story in the gas- station business.
Nationally, immigrants own 61% of all gas stations, according to the National Immigration Forum, up from 53% in 2010.
Anecdotally, that trend is clearly evidenced in the Seattle area. When Said arrived in 1986, he says, many local stations were still owned by white people. Today, he says, it’s “mixed — immigrants, like me or Indians or Koreans.”
Fewer stations
Retail gasoline isn’t the growth industry it once was, however. Environmental regulations have grown more expensive, and the risks can be prohibitive: A fuel leak can close a station for years and cost several million dollars to clean up. Safeways, Costcos and other “hypermarkets” continue to woo gas- station customers.
Little wonder that in the past decade, the only new retail gasoline locations to open in Seattle haven’t been traditional gas stations, but supermarket fueling centers, according to the state Department of Ecology, which regulates stations’ underground fuel tanks. The last new traditional gas station to receive permits in Seattle — a 7-Eleven on Leary Way Northwest — was back in 2001.
In fact, since the recession, the Seattle area has lost traditional stations. Since 2007, the number of gas stations and convenience stores in Seattle dropped from 115 to 94, while countywide they slipped; from 314 to 301, according to the state Department of Revenue. More than a few have been replaced by apartments: In urban areas like Seattle, the best locations for gas stations — along busy arterials — are also the best places for apartments, which are far more profitable.
That trend is likely to intensify. Harminder Momi, a 52-year-old Indian immigrant who bought the first of his four gas stations in 1998, says he gets “three or four calls” a week from real-estate brokers about two of his Shell stations, in Crown Hill and Wallingford. He says the real estate has become so valuable that he doubts a buyer who tried to run the locations as gas stations could make enough to pay the mortgage. “They’d probably go underwater,” he says.
The shrinking number of stations has allowed surviving dealers to bump up their gasoline prices and even pad their gross margins to nearly 35 cents a gallon, in some cases. But that’s probably short-lived, given that overall gasoline sales at many Seattle-area stations appear to be falling, in part as newer cars use less fuel and as residents drive less.
Momi reckons his volume is down 10% since 2014. Even Said, for all his skill at boosting volumes, sold almost 2% less fuel in 2019 than in the previous year, says Leake.
Eventually that trend could well overwhelm Said’s ability to compensate with higher inside sales — at which point “we’re going to have to do something else,” he says.
But Said says that day is still some ways off. For now, Seattle-area drivers are still buying a lot of gasoline — and a lot of corn dogs, jojos and beer. And Said is still looking for fixer uppers — most recently, a 76 station in Redmond.
Standing in front of his Beacon Avenue location, Said glances across the busy street at a rival station, also a 76.
Does Said want to buy it? “If it becomes available,” Said says. “And the price is right.”