Git-N-Go bankruptcy forces closings, high fuel prices

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by Eric Olson|ret||ret||tab|

SBJ Reporter|ret||ret||tab|

eolson@sbj.net|ret||ret||tab|

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The Springfield area's most prevalent convenience store chain has closed five area stores and 39 throughout Missouri and Oklahoma to right its financial ship, which company officials said has been on the verge of sinking for years.|ret||ret||tab|

A week and a half after filing Chapter 11 bankruptcy, Git-N-Go Inc. had closed stores in Aurora, Ava, Battlefield, Nixa and on North Glenstone in Springfield. President Ron Ford said Feb. 11 that no other stores would close and the company was under reorganization to pay $1.4 million owed to 2,662 creditors. Git-N-Go is obtaining $4 million in financing from F&M Bank & Trust Co. of Tulsa, Okla., where Git-N-Go is based, Ford said.|ret||ret||tab|

Git-N-Go now operates 75 stores throughout Missouri and Oklahoma, 36 of them in the Springfield area. Ford said the majority of closings were in Tulsa.|ret||ret||tab|

Underperforming stores, high debt and stiff competition were factors in the bankruptcy, but perhaps most significantly it was "mismanagement of our assets and our priorities over the last seven or eight years," Ford said. He came on board in November 2003, replacing Robert Starkey, who resigned.|ret||ret||tab|

Ford would not disclose financials, but said store profits were down. According to documents filed in the U.S. Bankruptcy Court, Northern District of Oklahoma, company assets were $24,700,220 and debts were $25,176,786.|ret||ret||tab|

After filing bankruptcy Jan. 30, the company positioned its gas prices about 10 cents above the competition to discourage sales, Ford said. Prices remained inflated for nearly two weeks "because we knew whatever (fuel) we had we wouldn't be able to replace it," Ford said. "Until we got our financing in place it was hard to buy from anyone."|ret||ret||tab|

On Feb. 11, Git-N-Go gas prices dropped to competitive levels. "We finally got inventory levels back to normal levels in the stores," Ford said. "The last thing we wanted to do is be competitive on gasoline and not have any gasoline."|ret||ret||tab|

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Industry trends|ret||ret||tab|

Git-N-Go's financial problems are reflective of conditions throughout the $290 billion convenience store industry, according to Jeff Lenard of the National Association of Convenience Stores. Lenard cites convenience store density, growing competition and slimmer profit margins.|ret||ret||tab|

The impact may be greater in Oklahoma, Lenard said, where convenience stores are "over represented compared to national averages." According to 2002 data collected by NACS, Oklahoma had one store per 1,450 people, ranking it the No. 6 state in convenience stores per capita. The national average was 2,272 people for every store; Missouri was No. 23 at 1,961 people per store.|ret||ret||tab|

Greater implications rest with growing competition, Lenard added. "Everybody is a convenience retailer today," Lenard said, citing grocery stores, drug stores and dollar stores as "one-stop shops."|ret||ret||tab|

"That is the challenge we are in now," Lenard said. "Convenience is no longer our domain."|ret||ret||tab|

Furthermore, some of those same retailers emphasizing convenience have begun offering fuel sales outside their stores. Lenard said hypermarkets, or nontraditional fuel marketers such as Wal-Mart, Sam's Club, Albertson's and Price Cutter, have cut into convenience store fuel profit margins, which were at a 17-year low in 2002, the most recent data available.|ret||ret||tab|

That has been a real problem for gas station operators in Missouri, according to Rodney Leone, director of the Missouri Petroleum Marketers Association/Missouri Association of Convenience Stores. Big box retailers sell fuel at just below market rates, hoping to reap profits on larger purchases inside their stores, he said.|ret||ret||tab|

"With the philosophy of these big box retailers, they will continue to sell a national treasure our fuel as a loss leader in order to wipe out competition and ultimately control the marketplace," Leone said. "The bigger dogs are getting bigger and more powerful, and they're putting out of business the smaller dogs."|ret||ret||tab|

Lenard said convenience store bankruptcies are not uncommon nationally, as even the chain with the most stores today, 7-Eleven, filed bankruptcy in the early 1990s. Other substantial bankruptcies in recent years: Clark, the 14th largest chain with 630 stores filed in October 2002, as did Swifty Serve, which had 520 stores. Dairy Mart filed in September 2001 with 500 stores, Convenience USA filed in May 2001 with 236 stores, and Fas Mart filed in March 2001 with 169 stores. Git-N-Go had 114 stores when it filed bankruptcy.|ret||ret||tab|

"Some of the reasons for the bankruptcies were more business related than industry related," Lenard said. |ret||ret||tab|

Lenard suspects decreasing cigarette sales at convenience stores also may have influenced Git-N-Go's financial picture. He said cigarette sales at convenience stores were down 13 percent in 2002, partly due to cigarette sales on Indian reservations, where state taxes often are not assessed. Areas in which reservations are prevalent, such as Oklahoma, where state taxes are 23 cents per pack, are more severely affected, Lenard said. Though Native Americans are supposed to assess taxes to those not part of a tribe, Lenard said, it is often overlooked.|ret||ret||tab|

Pay-at-the-pump technology also may contribute to decreased market share, but not as much as some may think, Lenard said. "It's an issue that has proponents on both sides."|ret||ret||tab|

Statistics indicate a direct correlation: between 1992 and 2002, the period during which pay-at-the-pump technology was introduced, the percentage of in-store sales relative to fuel sales decreased from 52.5 percent to 37.6 percent. By 2002, 80 percent of fuel marketers were offering pay-at-the-pump, according to an NACS survey.|ret||ret||tab|

"Did they go hand-in-hand? Probably," Lenard said. But it's a cost of doing business, he added. "If you don't offer pay-at-the-pump, you'll probably fall further behind."|ret||ret||tab|

At 3 percent per transaction, credit card costs are eating deeper into margins, because more than half of customers pay at the pump, Lenard said.|ret||ret||tab|

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Local impact|ret||ret||tab|

Convenience store supplier Amcon Distributing, 821 E. Commercial, is tops among the 20 largest creditors owed. It is owed $466,235. Daylight Donuts, which served doughnuts daily to 32 area stores, also is among Git-N-Go's creditors and has suspended deliveries, said owner Dwight Martin. |ret||ret||tab|

Martin would not disclose the value of the contract, but an employee at a local Git-N-Go said it is about $9,000 a month for area stores. "We've had to make some changes staff wise and in our operations," Martin said, including fewer hours and reduced employment through attrition.|ret||ret||tab|

Martin expects to resume business with Git-N-Go when debts are paid.|ret||ret||tab|

A meeting of creditors is set for March 10 in Tulsa. Ford said it could as long as one year for Git-N-Go to emerge.|ret||ret||tab|

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