Shell/PTT Franchise

[poorfalang]

If i wanted to get a franchise with PTT Or Shell where would i start?
Comic Replies not welcome/ but you can take the piss a little bit.

[AntRobertson]

Originally Posted by poorfalang

If i wanted to get a franchise with PTT Or Shell where would i start?

Head office(s) I suppose.

That being said are they actually even franchises?

[Necron99]

By contacting ptt or shell?

[The Fresh Prince]

I've thought about this before. I bet the start up costs are pretty huge.

[AntRobertson]

Originally Posted by poorfalang

but you can take the piss a little bit

Oh, and fill it up please... 95 Gasahol.

[The Fresh Prince]

Just found this article from 2006 so a little out of date.

Article: Thailand: Shell Autoserv to set up franchises. | AccessMyLibrary - Promoting library advocacy

"Currently, each Shell Autoserv branch in Thailand requires about Bt10 million to set up, depending on the location."

Not as much as I thought it would be.

[aging one]

But you must buy several rai of land for the station.

[Necron99]

Setup costs for a main road PTT are around 20 million.
Your margin on Petrol after costs is about .50 baht/ liter.
Seems a good way to use land you own, but not really a gold mine, unless maybe you run all the franchises yourself.

Theft would be a major problem with such low margins, a pump jockey walking out with the last tankful he sold in his pocket is 20% of your days profits.

[AntRobertson]

Originally Posted by Necron99

Your margin on Petrol after costs is about .50 baht/ liter.

Not a lot. I guess most of the money is in any sales from on-site shops etc.

[Necron99]

^ bit Like monopoly, you need to own all the train stations to make it worthwhile.
I think you would find the people doing well out of ptt own half a dozen or more and can leaverage bulk buying and off market gas to up their take.
To make money of the service shops you need to be Ina really good spot. No booze in the 7/11 which is a good part of their profit margin.
Probably a good solid way to park a 100 million with lots of tax free earnings if you are in the know.


Maybe start small with a somtum stand and some liter bottles of gas out the front and see how it works out.

[Fondles]

Stole this post from TV, sounds like a big finacial commitment (and head fuck) for little return.

Originally Posted by Soundman

Some figures doing the retail petrol business with PTT in Thailand:


Retail margin 1.05B per litre +/- 0.05B depending on which depot (klang) you take delivery from.

less delivery cost - example: our pump is 150km from Sri Racha depot - delivery cost is currently 0.25B per litre.

less selling cost - averages 0.35B per litre for staff, utilities, maintenance & other overheads.

Profit margin - 0.45B per litre.

Note: PTT structures it's nationwide pricing so that all retailers have approximately the same margin (0.80B per litre) after delivery costs.

Typical sales:

Small local community pump - 3k - 6k litres per day. Profit from sales @ 5k litres equals about 2000B per day.

Large Highway pump - 15k - 30k litres per day. Profit from sales @ 20k litres equals about 9000B per day.

It is hard to work out an actual cost for a petrol station, all locations are different.

Our example (pump on a major inter provincial road, next to a factory complex.)

Land - current valuation - 10 million Baht. PTT service station package - 6 million Baht. All other buildings and property development - 5 million Baht. This includes staff rooms, border fence & 14 rental shops excluding the 7/11. Add to that the (smart) option of a petrol truck - another 3 million Baht.

Call it 20 million Baht to get into a business selling 12k litres per day.

Note on petrol sales and price fluctuations - PTT informs its retailers 5.00pm the preceding day to a price fluctuation. An example of a major problem is ordering your petrol, which you have to do irrespective of any anticipated price change, delivery comes usually late (after price change announcement) in the ordering day, price goes down by 0.80B, you lose 0.35 per litre for either 15k or 35k litres depending on the capacity of your truck.


Staff: Pump hands easy to find, high turnover and frequent problems with cash dis-appearing. Cashiers - hard to find - especially with guarantor. Some will try all sorts of scams to increase their salary.


Lubricants:

Good money to be made selling lubricants.

However, as with many things PTT do to keep control, be very careful about the monthly sales quota you agree to in your contract. PTT will ensure that you only have access to the retail pricing package for their lubricants & will do nothing for you if a Tesco opens next door and sells the same products cheaper than you can buy them for because of Tesco's access to wholesale buying rates. PTT will actually fine you for not maintaining your quota.


Credit Cards:

Even with the best available rates, credit card charges will consume nearly half your net profit from petrol only sales (based on retail price of 30B per litre). We do not accept credit cards, however, we have installed an ATM so that credit card customers can withdraw cash to pay for their fuel. It is hardly surprising that many customers are un-willing to do this becasue of the charges involved.


Rental spaces:

In our pump, we generate nearly as much profit from renting retail space, including renting the 7/11 to CPALL, as we do from petrol sales. We have the option of buying the franchise rights to 7/11, however, for all the extra money invested (3 million including cash guarantee), work and headache, we have decided not to do that, especially since you cannot sell alcohol which appears, from previous experience, to be where nearly 1/4 of 7/11's profit comes from.


Jobbers:

The scourge of PTT and their monopolistic ambitions. Jobbers are individuals, companies or syndicates with mountains of cash who use the oil market much as other investors use the share market for short term trading positions. Flexible buying of your retail oil needs through jobbers can significantly enhance your profitability. Generally speaking your price will be 0.20B - 0.60B cheaper per litre buying through a jobber. Be aware that each different jobber will have different prices on different products at different times due to their collective bulk purchasing weeks in advance.

The problem with placing all of your oil orders through jobbers is you will run foul of your contract with the company whose logo you represent and, in PTT's case, will fine you for not selling your quota, followed by more serious ramifications depending on your finance structure.


Warning - The petrol business is a business only for those who have money. Do not even think about this business without having at least the buy in price of the pump package, and preferably owning the land out-right.

If you have a really good location, PTT will be more than happy to finance the costs of building the pump. They do this with an ulterior motive which I cannot go into here. If PTT finances your pump, they will impose un-realistic sales quotas, with stiff penalties for non-compliance.

If you want to get into the petrol business in Thailand, pay for it in cash, or at the minimum, independant financing. DO NOT use company financing.


To partly answer the OP's question: Our pump is a small part of the family business, a 30 million Baht registered limited partnership. I have percentage in that partnership. I did not have anything to do with the original opening of the partnership & have only been a recent addition, which was a two minute formality at the provincial office.

Open A Pump Station In Thailand - SME Business in Thailand - Thailand Forum

[Thetyim]

Why go for a franchise?
You have to follow all their rules and will be limited to 7-11 and Amazon or whoever they support.
Build your own gas station and buy their gas and rent out selling areas to the highest bidder.

[sunsetter]

Originally Posted by Necron99

No booze in the 7/11

what country?

[Humbert]

It's getting harder and harder for independents to compete. PTT is aggressively rolling out superstations that draw customers with KFC and other QSR, coffee, 7-11 and other retail. NGV is another option if you are in the right location.

[poorfalang]

Originally Posted by Necron99

By contacting ptt or shell?

:applause:

[Thetyim]

Originally Posted by Humbert

NGV is another option if you are in the right location.

Yes, what area are we talking about PoorFalang and city or highway location ?

[poorfalang]

interesting so far,

thanks for all the info so far,
Fondles, great info that was, the start up cost are a lot more than i was thinking,
The Fresh Prince, going to read that after lunch
Thetyim, i actually own one station, already, but it is sort in and it bring in about 500 baht a day after expenses, we only sell gas 95 and diesel, also we are the only decent looking pump for about 20-25 kilos,
i mean, no wooden hut with a few bottles,
proper overhead roof plenty space cemented floor and head pumps ( safety signs and exhaust too) massive in and out gate 10 whell trucks, no problem,
Humbert NGV absolutely right, but where we are just not enough custumer,

[poorfalang]

we have heard from some know all farmer in the village that it cost a million baht to get the signs from Shell/license maybe that what he means,
space wise we are nearly there really, in and out, automatic heads but we have tanks over land, they insist underground, i will look further into it,
i will beg the missus to call them up.

[poorfalang]

Originally Posted by aging one

But you must buy several rai of land for the station.

already have enough land by the road

[VocalNeal]

Where is the nearest LPG station? Call World Gas?

[poorfalang]

good point there Vocal,
it actually at least 30ishhh kilos away.
is anyone still using that?
havent they all moved to ngv?

[Thetyim]

Originally Posted by poorfalang

Humbert NGV absolutely right, but where we are just not enough custumer,

Do you have a load of taxi, school bus, song teau near you?
We have two small gas stations (owned by the same guy) in the city.
He gets all the above customers by under cutting the franchised pumps.
His pumps are always busy and he buys a new 3 million baht car every year.

[Humbert]

Originally Posted by poorfalang

i mean, no wooden hut with a few bottles,
proper overhead roof plenty space cemented floor and head pumps ( safety signs and exhaust too) massive in and out gate 10 whell trucks, no problem,

I understand your situation. My company is currently doing design for the renovation of a lot of Susco stations in the south. The market conditions are much different in rural areas.

[poorfalang]

where i live its not city and not highway,
not sure what you call it, not really in the sticks either.