Applegreen ambition still strong
As Applegreen opened its latest motorway monolith on the way to Lisburn, Joe Barrett told Ireland’s Forecourt & Convenience Retailer the company is not short on ambition
Applegreen’s 2016 was huge. Along with adding a wealth of new dealerships, strengthening its hold in England and developing its presence in the US, the company managed to stop the traffic on opening day of its first M1 services in Northern Ireland, Southbound of Lisburn.
The news story about rubber-necking commuters was indicative of a company that has ignited the Irish and Northern Irish forecourt sector, and made the forecourt – dare we say it – cool.
The company also delighted its shareholders with a strong showing on the balance sheet in its first-half results for the year.
Speaking to Ireland’s Forecourt & Convenience Retailer, chief operations officer Joe Barrett was upbeat about the company’s recent opening – the Lisburn Northbound Motorway Service Station (MSA).
The site brought some 120 jobs for the area, with the grand opening taking place in mid-February.
Ahead of the opening, the company held its first Northern Ireland recruitment fair, highlighting the range of opportunities in its food service and convenience sections, and even in retail management.
“Northern Ireland is an attractive market for us,” Joe Barrett said, explaining that the company still has an opportunity to build its fourth Northern Irish motorway site, opposite its initial MSA in Templepatrick.
“We saw the opportunity when we purchased the first location back in 2015,” he said. “The first two sites, Templepatrick Southbound and Lisburn Northbound, were the busier sides of the road.
“What you tend to find with motorway sites is one side is busier than the other, so we invested in the two busier sides first and now we’ve started working on the opposite lanes.”
The company’s approach, taking on plots on both sides of the motorway, speaks volumes about Applegreen’s ambition and vision.
“We’ve always invested in new stores and opportunities,” Joe said. “That’s not going to change.”
Applegreen may have no plans to abate its hunger for expansion and development, but we wondered if the fallout from Brexit may have spoiled its appetite somewhat.
“Well, there’s going to be a lot of ‘wait and see’,” Joe told us. “We are retailers of convenience products, and consumer confidence is extremely important to that industry, so there’s been positives and negatives.”
In terms of negatives, Joe noted that a return to a hard border would certainly fit in this category. But then again, the Applegreen chief said exchange rate changes have meant lots of opportunities in the Republic of Ireland to invest in the north and import from the UK.
“We’re also trying to look at what our customers want in each country,” he said. “Each region is unique and we tailor the offer to suit the local market so we’re competing on a level playing field.”
It’s an attitude that’s paying dividends, and not just for Joe and chief executive Bob Etchingham. In September, Applegreen reported its revenues rose 7.4% to €556 million, putting smiles on the faces of the company’s many shareholders.
We asked how much of a role the interests of shareholders played in decision making at Applegreen.
“Back in 2015, Bob and I decided the best thing for the company was to enter the public market and sell a number of shares,” he said.
“The first thing we did was make a contribution to members of staff that had been with us for over five years and provide them with share options. We also gave an extra month’s salary to staff with us over a year in our head office.
“We shared the proceeds with the people that helped us and wanted us to succeed. I believe our shareholders are like-minded, and want us to continue to grow and expand.
“We have great plans for the business, and we have buy-in from our shareholders on those plans. Of course, we don’t have a day-to-day relationship with them, but we do meet twice a year and they’re happy to see our continued programme of investment.”
Joe also said he was glad both he and Bob had not chosen to sell the company completely, such as the recent selling of Irish food distribution giant, Fyffes.
He said: “Our business sector, especially in the UK, has seen a significant amount of private equity coming into the industry, with many businesses investing. As a result there is a significant amount of ownership change happening in both the UK and Ireland within this sector. ”
A lot of that movement can be laid at the feet of Applegreen, whose innovations in terms of large scale motorway service stations, and inclusion of big brand food franchises has been replicated throughout the market.
But far from being a source of frustration, Joe takes the copycatting as a compliment.
“Imitation is the greatest form of flattery, they say,” he laughs. “The way we look at it is that we’re concentrating on our consumers and not our competitors. We strive to match our customers’ need at each site with the most appropriate food offer.”
In terms of food, Applegreen’s partnership with Greggs was one of the most significant, providing the British bakery giant with a foothold in the NI market that it has been keen to exploit.
“In Northern Ireland, Gregg’s has worked very well, and it helped them get a foot print in new territory,” Joe said. “Good quality at a good price always works. That’s why Chopstix has also worked really well, and we continue to work very closely with them.”
Northern Ireland has also welcomed the Lavazza Coffee offer, which is different to Applegreen’s offer south of the border, where Costa Coffee is more prominent.
They’re just part of a package of food offers that includes Burger King, Subway, Bakewell, Freshii, and more.
And the forthcoming Lisburn Road Northbound site will also see the introduction of a new brand – Splitz Ice-Cream.
“It’s an own label brand we developed ourselves by our design and brand team,” Joe explained. “We did all the work ourselves, so it’s something we’re very excited about.”
Another reason for excitement at Applegreen is its announcement in January that it has bought a 50% share in the Dublin Port Terminal.
The stake was owned by Esso’s Irish operation, which was acquired by Topaz in October 2015. But Competition and Consumer Protection Commission conditions on the purchase meant their terminal share couldn’t be part of the deal, placing it on the open market.
Pending Competition Authority agreement, the terminal will be jointly owned by Applegreen and Valero.
“This is a very significant investment, and will give us a new continuity of supply,” Joe said. “The port is a source of significant fuel volume, and it will help us be more efficient which we’ll use to offer better fuel prices to our customers.
“We’re looking forward to working with Valero on this project. They’ve been a supplier of ours for a good number of years, and we have a good history of working well with them.”
Securing such a major stake in the pivotal terminal is sure to galvanise the company’s ambitions to expand yet further throughout Ireland, the UK and the US.
However, we wondered whether Applegreen’s intentions could also extend to the European continent.
“We’re still looking at lots of opportunities to expand in the UK, and we have a lot to do there. The Republic of Ireland is also still growing strong for us. In addition to this, most people don’t realise just how vast the United States is, so we have still massive growth potential and opportunity there,” he said.
And hinting about the brands possible continued expansion into the US, Joe added: “Our presence in the US is small at present (six sites in Long Island, New York), but that market is good for us, so we have a lot on our plate. If the right opportunity came along in Europe, we would certainly look at it, but I think we have enough in front of us for now.”