15 July 2017 Issue 17 Jun/Jul

The petrol stations reinventing themselves for an electric future

Retail has become a cash cow for motorway service stations. Westmorland Family brought in £92m last year from just two outlets thanks to posh sausage rolls.

About 30 miles north of Bristol along the M5, there’s an artisan petrol station.

Gloucester Services houses an on-site butchers where people pre-order meat, stating whether they’ll be travelling north or south. Many don’t even stop for petrol. 

The side of the M5 might seem an incongruous place to sell the kind of fare normally found in a village farmers’ market. But black pudding scotch eggs, wild boar sausage rolls and cheeses from the Cotswolds’ finest producers have been selling in strong numbers alongside petrol since it opened in 2014. There’s not an arcade machine or a KFC in sight.

Retail fuelling growth

Gloucester Services has been referred to as a noteworthy example of how petrol stations could well be an emerging format for retail.

 More fuel-efficient cars and higher forecourt rents have squeezed the business of selling petrol, especially in cities.

Meanwhile, motorway service stations are thriving. UK operators Moto, Road Chef, and Welcome Break have grown by partnering with the likes of Burger King and WHSmith. 

This year, Pizza Express announced it would open its first motorwayside restaurant at a service station near Oxford. 

Back in February, Welcome Break was reported to have a £700m price tag.

Two-station chain

For Westmorland Family, the company behind Gloucester Services, the foray into roadside retail started in 1972 with its first project, Tebay Services in the Lake District. When the family learnt the M5 was going to be built straight through their Cumbrian farm they put in a bid to run the service station.

It featured a farm shop with fresh baked goods and a small cafe. Then, four decades after opening Tebay, Gloucester Services became the company’s second outpost.

Last year Westmorland Family brought in £92m in sales and profit of £6m. Over eight million people came through its doors.

Sarah Dunning, CEO of Westmorland Family, says the goal is to be the ‘stoppers’ choice’, meaning that drivers actively seek out a stop at Gloucester Services.

Another petrol station, Parkfoot Spar in West Malling, Kent, has spent the past four years also bringing food to the forefront of its business. Owner David Charman estimates that less than 30% of his customers buy fuel when they visit.

Wealthy village people

Both Parkfoot and Gloucester Services have benefited from being located in affluent areas. King’s Hill and Painswick – a stone’s throw from Parkfoot and Gloucester Services respectively – are two of the wealthiest villages in the UK.

The emergence of service stations as places people come to shop has further potential. 

‘Our shop is our key profit earner, and it’s the reason why people choose to come to us,’ Charman explains. ‘Ten years ago, virtually no [filling] sites in the country could claim that.’


Insight

  • Forecourt rents have soared, increasing on average by more than 50% in the last six years. Most stations make just a 7% profit on petrol sales.
  • Meanwhile, fuel-efficient cars and supermarkets opening their own petrol stations have created more competition.
  • It’s led to a wholesale closure of petrol stations. In the past 50 years more than half of British petrol stations have closed. Last year, Shell, Esso and BP sold 1,085 stations between them.
  • The Petrol Retail Association says food is where the future lies, accounting for more than 10% of annual revenue growth last year.