Acquisitions Anonymous - #1 for business buying, selling and operating - Two Truck Stops for Sale - Guest Tanner Doss of El Cap Holdings - Acquisitions Anonymous - e47

Episode Date: October 14, 2021

Truck stop episode! This week, we're joined by Tanner Doss (COO of El Cap Holdings / https://www.elcapholdings.com/tanner). Tanner has a long career in investment banking, the air force and working for a large family office in the truck stop business. - a $900k truck stop in Alice, Texas of questonable quality - a $12mm truck stop somewhere in California (we think) Enjoy!-----* Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel.* Do you enjoy our content? Rate our show!* Follow us on twitter @acquanon Learnings about small business acquisitions and operations.-----Past guests on Acquanon include Nick Huber, Brent Beshore, Aaron Rubin, Mike Botkin, Ari Ozick, Mitchell Baldridge, Xavier Helgelsen, Mike Loftus, Steve Divitkos, Dzmitry Miranovich, Morgan Tate and more.-----Additional episodes you might enjoy:#62 Two Landscaping Businesses for Sale - Mike Loftus CEO of Connor's Landscaping#66 Analyzing Software Businesses for Sale with Steve Divitkos, experienced industry CEO#42 $900k Moving and Storage Company / $500k Rural Mini-Storage#61 Two Manufacturing Businesses for Sale - Brent Beshore - Founder and CEO at Permanent Equity#24 $5mm pool services and lifeguard staffing co / $2mm septic services business -  featuring baller @WilsonCompanies as a special guest!#45 $800k/yr cleaning business in Midland, TX / a $565k/yr window cleaning business in San Antonio, TX #48 Two Landscaping Businesses for Sale - Mike Botkin of Benchmark Group--- Support this podcast: https://anchor.fm/dealtalk/supportSubscribe to weekly our Newsletter and get curated deals in your inboxAdvertise with us by clicking here Do you love Acquanon and want to see our smiling faces? Subscribe to our Youtube channel. Do you enjoy our content? Rate our show! Follow us on Twitter @acquanon Learnings about small business acquisitions and operations. For inquiries or suggestions, email us at [e-mail]

Hey, welcome back, everybody, to another episode of Acquisitions Anonymous. We are really excited that you're joining us today. We have a fun episode into a very obscure and interesting niche with a great special guest. So I'm Mills Snell. I'm one of your co-host along with Michael Girdley and usually joined by Bill Di Alessandro. Bill's wife had a baby this past week. So if you interact with him on Twitter, make sure you tell him congrats. And we've got a good one for you today.

we have Tanner Doss joining us. Tanner is going to talk about a topic that's not within his current wheelhouse, but is part of his previous life. And so we get to just garner a bunch of fruit from him. So Tanner, thanks a much for joining us. Truck stop episode. Truck stop episode. I'm so stoked about this. Okay, sorry. Over to you guys. Tanner, give us a little background on you and, and yeah, what you, what kind of experience and past life you bring to the table to this conversation. Sure. My background isn't, I would say, necessarily very similar to all the other investors I kind of talk to who kind of have a, you know, investment banking, business school, private equity, etc. My first five and a half years of my career were spent in the United States Air Force. So I went to the Air Force Academy, spent time in the military.

And then I actually ended up getting a job at Goldman Sachs in the investment bank directly after that program, which was fantastic through a veterans integration program that Goldman Sachs had just created. I was actually heading to business school. and then I got this job and they asked me to kind of stay on full time. I worked in the industrials group and Natural Resources Group up in New York City in Houston, Texas. And then I joined a Long Short Equity Hedge Fund, focused on the energy market called Camus Capital out in Houston. I worked for two of the smartest energy investors that are probably doing energy equities. And from that, I parlayed into a family office role out here in Utah from the family who own Flying J's truck stop. So I got an intimate knowledge of the truck stop business.

They also own Maverick gas stations, which is out here in the Mountain West. We're in 11 states. There's about 350 gas stations there. So we got a chance to look at a bunch of different packages of gas stations. And from that family office, I actually moved on to a venture capital fund now that I'm running with two other partners called LCAP, which is a fund focused in Austin, Texas, and in Salt Lake City, Utah, focused on software, seed stage investing. So a lot of different areas of investing, but I think the overarching theme has been kind of investing throughout my entire career. post-military. I love it, man. So naturally, we could have talked about any asset class and any asset type. And Michael, as we're going through this in the pre-show, is like truck stops. We're talking about truck stops. So we have a couple of truck stop deals to talk about. And so this is why Tanner is getting paid the big bucks. Big bucks to deal with us. All right. So over to Michael for a first deal. I spontaneously got so excited about talking about truck stops. The moment Tanner opened his mouth, I was like, oh, you got to think about it this way, this way. I was like, oh, this is going to be golden.

So I have the first one, and Mills will do the second one. Cool, let me pull this up here, and we'll get going. So this one is off a buy-biz cell. It is a truck stop for sale, 2.25 acres is the title, located in Alice, Texas, which is in Jim Wells County. So if you know the kind of the bottom part of Texas, when it goes down to Mexico, it's down there kind of in the middle of nowhere. So we see a picture here, and it's an unbranded gas station.

It says T market on the front, which is something I've never heard of before. They're asking $900,000 for this gas station, looks a little rundown, cracks in the payment and stuff, and in the picture, has zero customers, which is always inspiring. So the cash flow is 90 grand. Gross revenue is $1.8 million. So that means they're taking in $1.8 million a year in revenue, and cash flow. selling 90,000, which is 5%, I guess, at the end. And EBIDA, so earnings before interest tax is and depreciation and amortization. By the way, Mills, I've started to get emails for people that they want us to

stop dumb and get down. So I don't know, man. We can't win. They have FF&E, Furnishers, fixtures, and equipment of 100,000, inventory of 110,000. Real estate is 550,000, and the business was established in 2003. The very first thing it says here is it is a truck store and convenience store for sale with no fuel contract. So I assume that's very important because as we looked at listings, this was something over and over again. The listings for these different gas stations we're saying. This area is a hub of the oil field industry. Many handy oil field workers are lives around here. That is incorrect. English, by the way. This property is Cancun. convert as an oil field industry office such as equipment lot and fuel dispense lot for 18-wheeler

parking and so on. This conditions are safe community, no attitude customers, a lot of commercial traffic located on highway. If you have children, this is a great place to raise up to compare to big city like Dallas or Houston, send them great college by law local competition. But this is amazing. This is like this before we start? No, this is like me, trying to read, this is like me trying to write Spanish. This is what it sounds like. Store inside, gas profits are much higher compared to others, 25 to 50 cents per gallon, plus steady selling truck supplies are over 80% margin, exclamation point. Beer and tobacco is less and something, something commercial customers. And if you're interested, please provide a

copy over your identification. That's the first for that. I've never gotten that. Attached NDA are required to look at the store details. So a little bit more about. this one. By the way, I think this is my number two favorite all-time listing behind the mini-figure, like a mini-figure. This is amazing. Location in Alice, Texas, you get the inventory. That's so great for them to throw that in. And you get the real estate as well. The building is 3,200 square feet, has six employees. The owner is not willing to finance, and it is a turnkey package. And the owner says, I can support all trainings and offer the manual that I had been kept and the business is listed by Chang Riolo with a 361 number, which is kind of Alice

Corpus Christi area. And that's what we know about this one. So there's some interesting stuff that sticks out here. But Tanner, what's your initial thoughts on a truck stop like this out in Alice, Texas? Yeah, I think, I mean, for one, the two and a quarter acres is usually always something. So what I kind of realize in this business, and I will never claim that I'm a real estate professional by any means is 99% of the time when we're looking at a business like this. It's like, all right, well, what does the real estate look like? Conveniently, they took that picture where you can't see any crossroads or if it's on a corner or whatever, which is normally the 99% of what we're looking at. It's all right, well, are there cars and trucks actually driving down this,

it's the highway? And if it is, a lot of the times, the corner is obviously the best for most people getting it on both sides. But we've also seen fantastic real estate that has no egressor. You can't get into it or can't get out of it. That's kind of one of the bigger problems we've seen. But, you know, for me, you know, this, you know, it looks like it's got, you know, four islands. It says truck stop. I'm not sure how tall that thing is. I don't know if you can get an 18 we learn there or not. I would kind of doubt it just from looking at it. But it's, you know, it's one of these things. The oil field business, I don't know if you guys felt that I was an energy investor in my past days. So it's been, you know, the Eagle for Chale hasn't

been really doing too much, but down there. A lot of people have been turning stuff off. So that would probably give me a little worry to start. I've never been to Alice, Texas, I'm not quite sure where it is. I had to pull it up on my map, and it looks like, you know, close to corpus. So getting fuel should be fairly easy at that point. So why is that in terms of being close to corpus matters? Oh, yeah. So we've got a, obviously, getting oil and gas in and out of, most of it's coming in on ships to port. So, you know, being close to the coast of Texas is very, very easy, obviously, to pick up gas, obviously, or oil to turn into gasoline. Obviously, you're getting a lot of that oil down here in South, South Texas. and Corpus Christi's got a big hub for, you know, one, processing all that gasoline into actual, you know, diesel and gas. And then getting that to Alice should be fairly easy. So trucking costs, getting that to and from would be very easy to get there. You know, one of the other reasons, obviously real estate probably number one is what we're kind of looking at just from where it is and who's driving around it. The location of that store. And then secondly, the environmental is usually our biggest next question.

I don't know how long this thing's been giving here. I don't know if it had a year. on it. But a lot of the stuff, the tanks in the ground, all the environmental aspects is usually the second one we're kind of running at the exact same time to make sure that we're not going to buy this thing and have to put in more than the asking price in order to dig up all those tanks and put them back in the ground. Tanner, what does this mean where they say no fuel contract in place? So most of the time when you're looking at one of these businesses, they're either going to have a fuel contract with a supplier, which can be both good and bad. If you've never gone and bought one of these things or set up a fuel contract.

doing it now depending on you're usually paying some sort of fixed price over the life of the contract or cost plus whenever getting it there. It's nice being able to come in. So if you are another

gas station owner in this area and you have a fuel contract with some supplier, being able to come in and add your supplier to that obviously is beneficial to the new owner because if you had to take over,

basically it kind of sells in line with the business. So if you had a fuel contract in place, the new owner basically have to keep that there. I mean, you could try to go back and try to talk with the supplier in order to get down on price, duration, et cetera.

Most of the times they're kind of S-O-L with whatever they kind of had in place. So it has been official to, no-unner. That's one of the things that we'd kind of look at where it's, you know, from my previous life, we obviously had a fueling fleet that would go out and kind of hit all of our stores. So having a contract in place would, we would not want to be touching that with a 10-foot pole, usually. So, I mean, is it an issue where, like, if you're looking at this and, I mean, I feel like you'd have to have some kind of strategic interest in buying this or know the area or whatever.

But let's just say you're thinking about buying this thing. Do you look at it and go, oh, man, I'm worried we may not be able to actually get fuel from a supply standpoint and a vendor relation standpoint if you don't have a contract? Or is that just, hey, you can order one-off trucks of fuel. It's just not under a contractual obligation? Yeah, you can do that. You're going to be paying a very big premium for that as well. So normally if you're locking at a price, it's good for kind of everyone involved, especially if you're the fuel supplier. If you can have, you know, kind of a fixed contract with fixed gallons, you know, going out the door on a kind of quarterly or annually basis, whatever that is.

Yeah. You can pay, you know, for me, that's the biggest thing, right? If you're buying a business like this with tanks in the ground that you've got to fill and not being, not having access to that, basically your cash flow goes to zero at that point if you can't get those things in the ground. Yeah. And buying one-off trucks to fill those things up gets very expensive. You're basically taking fuel price kind of at the rack, whatever that day is, which can kind of swing wildly if you've been watching oil and natural gas prices this year, depending on kind of what people have been, you know, kind of producing. And that, I mean, we could talk for two hours about that industry. But yeah, so I think to me it's, that's one of the biggest portions to me.

It's like, well, if you're going to buy this, just some guy who has no background in a gas station. being able to make sure there's actual fuel on the ground when you take over this thing to ensure that cash flow stay steady would be one of the biggest reasons that I'd be worried about. What's kind of a rule of thumb, Tanner, on like a healthy gas station, healthy truck stop? What should the ratio between fuel sales and store sales be? It seems like a lot of these reference inside and outside as the kind of nomenclature. But like is it one of these things where, hey, rule of thumb, you need to have a certain amount, certain percentage or certain ratio inside versus outside.

No, I mean, someone who's way more in this game, what could probably tell you otherwise. But for me, when I'd be kind of looking at it, your fuel margins are going to be, you know, kind of 10%ish, kind of depending on where you're living, getting fuel in and out of there. The United States is broken up into, so obviously southeast techs are South Texas like that. The access to fuel is obviously, like I said earlier, very easy to get. So your margins there are going to be a little bit because there's just a ton of supply kind of in that area. And people are paying. So when you're paying up for it, you're probably getting 10% of your fuel sales.

You're obviously trying to drive that through volume. The inside store sales, you're making a lot more money. So if you go in and see, you know, one of the greatest things people have been doing is, you know, I don't know, I don't drink soda. But if you're buying a soda at a gas station, right, like those are the big high margin items you're trying to get rolled through there. Those things cost sense, obviously, to do. And you're charging a buck to a buck 50. So those are the super high margin stuff. So obviously, the key to any gas station owner or C store owner is get the people inside.

And then a lot of people have been doing the self-branded stuff. So you go into a 7-Eleven or a Maverick. A lot of them are going to have their own food and items that they're going to be selling. Obviously, there's a lot higher margins. So you're not to pay for the shelf space, etc., that you're getting from somewhere else. But the whole key is to get, and that's why a lot of people use the loyalty points as well, at the C store. So you're going to sign up for the loyalty program. You'll get points, etc. Every time you come in to buy fuel, you know, for the truckers, it's nice. You can buy

showers or laundry, et cetera. And the whole point of that is get them inside the store, get them shopping, go buy a Coke, go buy a Snickers bar, et cetera, because that's where the money's really made on one of the actual cash flow dollars coming out of there because it's tough to make 10% margins roll for a long time, obviously. So you just talked a little bit about how, and this what I've always understood, the fuel margins are extremely low. They're just a, they're a loss leader almost to some extent to get you into buy the high margin stuff inside the convenience store. But as I look at this listing, these guys are running 25 to 50 cents per gallon fuel margin. So what, what have they decided to do here and what are the tradeoffs of that in terms of

their ability to be a good C store? Yeah, I'd be interested to see kind of when they took those margin, are that margin profile. Because one of the things, obviously, you've seen volatility in the oil and gas markets for a C-store owner is fantastic. You actually want oil prices to be kind of rolling up and down. As you all probably noticed, the driving season, especially in a place like Utah where I live currently, it obviously goes up in the summer and kind of goes down in the winter. And all the gas station chains are trying to play that. And it's also one of the, you know, obviously, so you'll see prices kind of rise, obviously,

in the summer before big holidays, etc., big driving holidays. But you're also going to get, we're very quick to react to high fuel prices at that point. So if a barrel of oil goes up two or three bucks over a week or a month, we're very quick to take that margin up to the consumer and kind of pass that through. And as that continues to fall, obviously it's very slowly coming down.

So they're kind of eating that margin on the way up and on the way down, which is fantastic for the C store owner. but when you get years of, you know, kind of $50 oil flat across, doesn't really move up or down, those margin compress a lot. So over the past few years when, you know, back from 2014 to basically now, you've had $108 oil down to $28 oil all the way back, you know, getting close to $70 now, which has been fantastic. So that volatility in the oil price obviously helps these C-store owners when they're, you know, if they could go buy fuel for, you know, when we're getting down to the low 40s, early 50s and put in some sort of contract there. And that way those margins,

margins kind of expand as the price of oil continues to go up for them so they can charge higher at the pump. People are kind of passing that through to the consumers. So I'd be surprised that they're making kind of 50 cent margins down there. They could have picked a, you know, I used to be an investment banker so I know how they can pick from, you know, March 28th to, you know, March 1st of the following year to make sure it was the perfect time to do that. But, you know, I'd kind of be surprised on that. But, you know, 25 cents on a 250, you know, it's about 10%. So that kind of makes sense from that world. But I was assuming that 50 cent on the top end is probably from some volatility in the oil price where they were kind of taking that

upside. I mean, is Alice, Michael, is Alice, like, such a small market where, like, there may be, like, a gas station or two, and they can just kind of dictate pricing? I mean, you think, like, super rural areas, right? Sometimes you see this where gas might be 30 or 40 cents a gallon more than, you know, if you were in kind of a major suburb. Yeah, I just looked it up. I mean, it's a city that's so poor and so small. Like, our factors. fireworks business doesn't have a location there. Like, we've gone a couple times and they can't support, they cannot support more than a couple of fireworks checks.

So, you know, it is a pretty challenged area as you work your way closer to the border like that. But usually in most of these towns, you have two or three at 19,000 people is how big it is. You have a half dozen gas stations to support that many people driving around kind of rural Texas. So I've seen gas stations like this. before, you know, typically there'll be the one or two in these small towns. It'll be the one or two

very good looking like a sheets or a similar kind of chain. Circle K will be in the market. And then you'll have a couple of branded independence. And then there's like the terrible gas station. And this is the one that shows up as the terrible gas station. So I just kind of went on a rambling there. But that's my guess of where this fits in the market of gas sea stores down there. No, I was just going to say, you know, I was kind of looking just at the distance from Corpus Christi. I was assuming a lot of this stuff, people driving through Alice, you know, are you going to be coming down from San Antonio down to the border or from Corpus kind of over to Laredo and down? And, you know, it's 50 miles from Corpus to me

going west, which to me that doesn't really seem like it's far enough away from a place like Corpus, because I'm assuming most of those guys when they're either picking up a load of fuel or anybody picking up something from the coast, you know, 50 miles, they're probably going to fill up during that time when they're kind of waiting around to get that load. So getting 50 miles outside of town probably doesn't make a ton of sense. It probably makes more sense going south from San Antonio. It looks like it's a little bit farther that way.

It's kind of like a midway point down to McAllen or Brownsville somewhere around there. Yeah, I mean, once you kind of leave San Antonio, this is kind of, you start going through a bunch of nowhere on 281, and then you get to this, it's in the middle of nowhere, and then you go through a bunch more nowhere that's until you get to basically the Mexican border

down in Brownsville and McAllen. So, super. Tanner, I'm curious about this. type of store and how much growth there's been like from folks like dollar general and and some of these dollar store chains that are almost kind of like replacing the need for grocery in the like seems like very similar geographic kind of sphere right this convenience store probably could and would have been the type of place where people are going to get some kind of staples type goods you know just consumer staple products some like food cereal.

like light groceries. Has that been like a secular kind of trend within the C-store space, seeing the kind of threat of competition from dollar stores, or am I just making all that up? No, I think that's 100% true. I mean, obviously it's kind of dependent on the town. I think Alice, Texas would probably be more dependent on a place like this for something like that. You know, if you get into San Antonio where, you know, a gas station is kind of the gas station, and you can go to CVS right down the block, right? you know, kind of depending on on where this is and kind of where it's at in town, you know, again, from those photos, you can't see if there's any neighborhoods or anything kind of close by

that people would be kind of using this. But I do think there is a, you know, going in to buy, it looks like there's something right across the street. You can't really see what it is. But, you know, but buy those household staples, you know, get a gallon of milk while you're there, pick up a loaf for bread while you're kind of in town. I do think that, that does do that. But I think, you know, more of the C store owners is trying to be like, hey, well, you're going be out filling up your truck once a week, once every two weeks. If you're here, let's, you know, let's get you to come in. You know, I highly doubt there's a lot of people, unless there's a neighborhood close by this place that are, you know, picking up and going just

walking in or driving their car and just to pick up a loaf of bread, to be honest with you. But yeah, I do think that is, that's something a lot of people are trying to do. And I think that and there's also all the delivery services that a lot of people are hitting, that a lot of people are trying to compete against where the whole reason is like, we want you to drive your car unless people are driving cars and calling stuff to their house, without having to get up and drive around to go pick up something like this. So that's a lot of gas station chains are trying to figure out that way to get people back into the store from just sitting on their home and being lazy and just getting stuff delivered

to their house. But I probably doubt Alice has an Uber Eats running around. Well, here's the map. This is actually, this happens in a lot of Texas cities. You'll have the main bypass. This is 281. This goes from San Antonio. down to the Rio Grande Valley

in Brownsville and McAllen and all that stuff. And this is actually not for drive-through folks. So it's off the two main roads, 44 and 281 going through town. So it looks like, they call it a truck stop, but man, it looks like it's mostly a little neighborhood.

Yeah, to be like truly a truck stop. Yeah, just from that picture, I think. It looked more like a gas station C store that we'd seen kind of in town. So I agree with you on that. Golly, they ripped us off. For the truck stop episode, I feel scammed. Let's go to the second one.

I think this one is a little bit more. So, Tanner, just in terms of one of the questions we get is like, okay, if you were to go look at this and consider making it work, what would you consider? And it's okay for the answer to be like, hell no, I'm staying away from this thing. But is there a way to make this deal interesting? You know, in all honesty, probably not for me. It's a one-off deal. I couldn't, was that branded? I couldn't tell.

It looks like it had a Circle K load on the front of it. T-marking. No branding. Yes, so no branding. So it would require a lot of kind of boots on the ground sitting around and kind of looking at kind of what's in the area. It looks like there's an H-EB kind of right down the street. And I don't know if usually a lot of the smarter gas station guys will piggyback off of that traffic and put one kind of right in their parking lot. So just from the looks of that one, I think it'd be a pretty tough to get on there and make it work. I'm assuming there's probably a newer kind of better looking fancier one kind of in Dallas, Texas that has probably looked at the competition and really.

there wasn't much to be worried about there. Got it. Okay. All right. Let's go to this next one. Let's switch to this other deal. It's a little bit maybe just different. It's just different. It's got to be good. Look at the title. It says gold mine Chevron truck stop. When is a listing that says gold mine in the title ever been bad? Like, let's go. It can be. Let's do this. All right. So asking price is $12 million on revenue of $9 million. They have $250,000 of inventory, $1.2 million of EBADA, furniture fixture and equipment of $100,000, and the real estate they're saying is worth $6 million. It's been around since 2018. The description here, highest volume fuel station

currently on the market. Recommended business opportunity exclusive biz listing. Very profitable Chevron fuel station and C store in the middle of nowhere. This is a theme in the middle of nowhere. 2018, they did about 2.1 million gallons. Inside sales was 693,000. 2019 gallons was about 2 million, a little bit, just a little bit less. Inside sales was 936,000. 2020 and 2021 financials are even stronger. Sellers CPA will provide all details once escrow is officially opened. Note from seller. As of May 30th, 2020, our net was $80,000. I think that's monthly. $80,000 more, oh no, this is probably total. As of May 30th, 2020, our net was $80,000 more in 2020 than in 2019. We are on-paced the net around $1.2 million this year versus the just $1.08 million in 2019. So year-over-year, the business is doing well as of May, which is a few months old at this point. They've done $700,000 in recent improvements, but they were opened in 2018.

They currently operate 100% absentee. The owner resides in Northern California. Gas margin 80 to $0.80 to a dollar. Diesel margin 57 to 62 cents. Inside sales margin is 48 cents. Would that be gross margin, right, on inside sales? Probably 48. I mean, it's got to be, right?

Business exclusive revenue guarantee. So this is something the broker is saying. If revenue drops from future direct competition, your purchase price will be adjusted accordingly. Some restrictions apply. Business exclusive financing. So this is also a note from the broker. Special seller financing is offered at an absolutely unheard of fixed rate of interest at 3% for 25 years. Also, some restrictions apply to that one. Buyer only needs 50% down and a strong FICO score to qualify. So just keep in mind, it's a $12 million asking price. So they need $6 million down and a strong FICO score. And this is literally below prime rate financing and includes no upfront

financing costs, no loan origination fees, no broker loan fees, no loan referral fees, no closing cost. Oh, if you just want to buy the business and not the real estate, it's $6 million. Wow, there's a lot here. 11 employees, you know, everything is up to date, 100% turn key. interesting sellers currently advertising on 37 billboards throughout the area. There's a new roof and new paving. The owner spends about 12 hours a month overseeing the station. It talks about gas margins again and the, it's almost 11 acres.

So that's pretty good size. Much larger, about four times the size of the other when we were looking at. He'll be around for 30 days and afterwards as needed. So this one compared to the last one, obviously this one looks much, I would read this teaser on my desk if it came across my desk. Let's put it that way. You know, doing two million gallons of fuel.

This is a gold mine. This is a gold mine, guys. Come on. Go ahead. I mean, but doing two million gallons of fuel, I mean, I'd really like to know where it is because I can't tell if that's a computer generated picture or not. But it seems like it, right? Probably so.

But it looks nice and having all the recent upgrades and all that sort of stuff has been nice. That's obviously something, you know, if there's two gas stations on two corners of the street and one looked like the last one and one looked like this one, 99 times out of 100 people are going to turn into this one. I've got young kids. So usually it's a stop and use the bathroom and fill up with gas. So I would feel much better with my wife getting out here than the last one and looking at it. But just from a pure, you know, it's been a couple of years since I was, I probably looked or a year since I kind of looked at one of these things. But, you know, the multiple on the EBITDA multiple to me is kind of in line with what we had had been seeing. kind of low double digits. A couple years ago, it was like kind of high teens for a lot of these good businesses like this. So, you know, to me, that's not super egregious. I'm sure there's some stuff you can kind of walk that back on the purchase price. But, you know, 11 acres is big.

You know, a normal C store we used to look at like an acre and a half kind of two acres of for a normal gas station. Obviously, the truck stops, they've got to be bigger. So I'm not quite sure how big a flying J or a pilot is. I'd say probably a little bit bigger than 11, but this one looks nice. It's interesting, Tanner. So, you know, I'm just thinking about kind of the way that capital is allocated to an investment like this. You've got, you know, $6 million in the real estate and then, you know, $6 million associated with the operating business. And obviously, you know, those are two very, very difficult things to pull apart, especially with the level of detail that we have right now.

But I'm just thinking about the fact that it's only been around since 2018. and let's just call it a $6 million piece of real estate. And so within three years, they had to spend another $700,000 updating the property. Is that like a typical cadence of KAPX on a property like this? That seems like it would be like if you're able to spend 10% of the property value every three years, it seems like it would be really hard to make the numbers work from a real estate perspective. Oh, absolutely. I think that was definitely fast.

I would have loved to see what they did for that $700K. I'm sure you could kind of find that out. But, you know, normally it's, it's, you know, you're definitely not spending that much money. Obviously, fresh coat of paint and some of that sort of stuff, kind of new stuff with inside kind of cleaning that stuff. It would be, you know, probably every five-ish years just to kind of keep stuff clean. Yeah. Yeah. And it'd be interesting to see, you know, obviously this one has been around since 2018 or the owner has had it since 2018.

It doesn't say if it was a new build at 2018. So I'm assuming there was probably some stuff just cleaning up that way. but yeah, I definitely think three years is a little quick. And I guess, I mean, you know, like you've alluded to, the infrastructure of this type of real estate, it's, you know, if you looked at like price per square foot to build just a retail building, right, it would be astronomically cheaper than building an equivalent size building that has the fuel tanks and the infrastructure and all the regulation that goes into it. A fully paved parking lot, you know, there's a lot more that goes into it than just like a

a 3,000 square foot, you know, little store or something like that. Yeah, absolutely. Some of the cool stuff we were doing at my previous life, you know, we were kind of doing some of the prefabbed stores so we could basically put them up very, very quickly and get them on, on site quickly. You know, a lot of the stuff that you don't really think about, which was very frustrating for me, when I was sitting in that seat was, you know, when we were to look at these businesses, finding a good piece of real estate, getting everything done, being like, yes, this is the one to finally breaking dirt, you know, 90% of that time is spent on environmental and legal issues. You've got to deal with the city. If you've got to cut curbs in order to get ingress and egress for where you're at,

sometimes if you're coming off the highway, you have to get an actual exit. I remember that's when Bucky's was originally raising money for the first one going out towards Houston. I talked to some guys that were, got pitched to be investors in that whole deal. And the guy was like, yeah, we literally have to create an off ramp off of I-10 to do this. And the guys are like, dude, that's insane. There's no way I'm spending that much money in order to get this thing done. Obviously, he looks like a genius now. But, you know, there's a lot of that stuff. Depending on where you're at, you know, I'm assuming Texas is probably pretty good. Michael, I know you build a lot of stuff around town and do a lot of real estate. I'm speaking from, you know, we were looking at various places in the

mountain. I mean, so you could imagine trying to do this in California. Like, it'd be three years of legal review and environmental review in order to get this stuff done. So that's a lot of the stuff, you know, so in most of the time, after the fact, you know, that $6 million real estate value, if someone wanted to buy this piece of property and turn it into something other than a C store, it would probably cost more than that and just legal fees and environmental issues to kind of get it done. So that's the hard part. I didn't know Bucky's raised money. I mean, I knew they raised money recently, but I didn't know the first store was outside money to make that happen. Yeah, so I think I had talked with a guy in the

fuel business who's been around the fuel business for quite a while. And he was kind of pitching it to me. I think it was kind of a friends and family raise at that point, just like, hey, I'm looking to go raise the store. He kind of gave him the concept like, you know, I want to make the bathrooms bigger than an entire C store alone, right? And the guys were like, you're, you're crazy. It's obviously worked out well for him. Yeah, for those of you that aren't in the Southeast US, Buckies is like this crazy phenomenon where they've basically built like the Disney world of travel stops. And it's just for cars only, no trucks. And they have, you go in there and it's bigger than a lot of grocery stores. 30,000 square feet, bathrooms that you would eat out of,

like, just gorgeous, everything. And it's a phenomenon. People like buy the T-shirts and it's crazy. I've never said, I've, I, you would not have predicted that that would have worked, but those guys are just printing money. The parking lots are just full of it. And they have tacos too. It's not bad. Oh, they're out. Yeah, they're very good. Get some beef jerky as well while you're there. Yeah. So a question about this. Actually, the other thing, thing they sell, which my kids love are called beaver nuggets. Oh, yes. Like these little chocolate covered sugar bombs.

Anyway, don't get me started. So one thing that's curious about this again is the gas margins actually higher, the outside margins actually higher than their inside margin. Like what's going on here? Do we know or we'd have to figure that out? That's definitely something I would be looking at as well. Just kind of seeing, and it could be, I don't know if they talked about having a fuel contract on this one or not. I don't remember you saying that or not.

Well, if they're branded Chevron, they have to have one, right? Or is that not the way it works? Yes. So they are branded? I didn't, yeah, I should have seen that big Chevron sign in the window there. Yeah, so they would be buying all their fuel from Chevron. What's interesting to me is you look at, you know, $9 million of revenue and basically 10% of that is inside sales. I would have thought, you know, maybe you could generate more, but you know 90-10, 90% is fuel-related, 10% from inside. And, you know, when you're just thinking about the math here, to get to 1.2 million in EBITDA, it's just interesting to think about kind of the attribution, right, of revenue and then the attribution of profitability between those two segments.

Yeah, I mean, that's a, I don't really know what to say to that. I agree. Well, I guess the math, the math doesn't, maybe we're getting around to you, the math doesn't really work out. Well, I guess maybe there's, I'm forgetting all the cost. But yeah, it's just super. I think I'm with you, Mills. I'm like, why aren't they selling more stuff inside if they're selling that many millions of gallons? Yeah.

I mean, if you assume each average fill up is 50 gallons between trucks and cars, you know, that's a lot of cars coming through there. And you're only selling 900 grand of coffee and Wrigley Spearmac Gum. Like, what's going on with this thing? I'm so glad to know what you get when you go in a C store, Michael. coffee and Wrigley-Sperman go. Trying to keep this G-rated. Yeah, because that's another thing.

We'll look at just cars coming through versus trucks is obviously trucks are going to be spending a lot more, buying a lot more fuel. Usually the diesel margins, I said they're probably a little bit cheaper on there. I think they said their diesel margin was, you have, 57 cents, obviously. So when those guys are coming in, one guy filling up with a ton of diesel fuel, you know, might come in and buy a Coke and get back in the truck and leave. versus kind of that truck to car ratio would be nice to see.

Obviously, that many gallons. It seems like there could be a lot of trucks kind of rolling through here. It's something else that stood out is sellers currently advertising on 37 billboards. I don't even think your average Buckees has that many. Buckys is also famous for their billboards. What does this make you think that they're advertising that much? Or is there something just about the C-Store business and billboards being effective for them that I don't understand? I mean, 37 billboards, that's a lot of billboards. And it's, you know, to me, just looking through there, it's like, all right, well, there's probably a lot of costs I can take back in-house and add to the bottom line there. You know, and again, like, I don't know what that kind of looks like. It could be a one-second blip on an electric electronic billboard if they're anywhere close to those. So the cost might be minimal at that point. But to me, that's kind of ridiculous to me if you have good real estate, the odds of you having to advertise that is, I mean, getting someone to turn and drive.

five miles versus the one right there on the corner, not very many people would do that. So it's kind of interesting. They'd be spending that much money on it and kind of driving access to it. To me, kind of one billboard on either side of the highway, depending on where this thing is at, maybe two, a couple miles out and letting you know

they're getting there, similar to what Flying J and Pilot does. 37 seems like a lot. I'm also fascinated by these revenue guarantee and biz exclusive financing act. That seems very hokey from the broker, don't you think? The broker's picture has a hat on, and I never trust people that have professional photos with hats on, just so you know. Actually, the other day, the other day I was talking to somebody who was really, really experienced, and he said, Girdley, I never hire anyone who shows up to the interview wearing cuff links. I think that's probably a pretty good rule of thumb.

I was like, tell me more. I looked down to my sleeves. I was like, thank God. But, you know, he said anybody that shows up to the interview and cufflinks is, is a very good thing. is going to worry more about how they come across and look than they are about achieving. And when you're hiring people, you want to achieve. And sometimes you have to put your own personal image behind that. And cufflinks people, he says zero percent success.

Anyway, so what do you think about these personal guarantees if competition shows up? And then also the crazy seller financing. Yeah, to me, the revenue guarantee is one where it sounds like they probably know something, right? If there's a plot of land being developed probably pretty close by and or, I mean, to me, when you see a business like this as a C-store owner operator, doing two million plus gallons a couple years old, you know, doing a million plus of EBITDA, which, you know, depending on the area could be a lot. You know, some of our better stores were doing three, four, five million of EBITDA, depending on where they were at. Obviously, weren't as big either.

So, you know, to me, if there was a big, you know, other branded player in town building right across the street, obviously I think you're going to get hit. So it kind of sounds hokey. I agree with you putting that in there because there probably is the threat of direct competition if they're putting it in there. Yeah, something imminent. Maybe just a note to end on Tanner. I mean, who, what's the landscape of buyers like for these type of truck stops? I mean, you represented one end of the spectrum, right? and you guys were probably fairly acquisitive,

but it just seems like there's probably this barbell kind of thing going on where you have a major brand who is gobbling up, really just based on real estate. They don't care about your sales. They don't care about what the actual physical infrastructure is because all that's going to change. And then the other end of the spectrum is like just a guy who's like, hey, I'm going to own and operate this thing.

And if it throws off $50,000 or $60,000 a year, then that's great. Is there anything in the middle or am I missing the landscape? No, you know, there are definitely some stuff in the middle. I think people have gotten smart to that and kind of wise. I wouldn't say, you know, like the big private equity guys, but there's some private equity type players getting into this market where, you know, when we were looking at packages of, um, and granted, our gas stations or C stores had a full, you know, kind of M&A team, real estate team that look at a lot of this stuff. But we'd look for packages, um, you know, in the hundreds, you know, 50 to 100, trying to like add on or tack on to different. geographies that we were not in. And usually buying the onesie-toosies from, you know, the mom-pop guys and somewhere like Alice, Texas, it was usually more trouble than it was worth because, you know, you had to go in a lot of those guys, if they're just trying to squeak out enough money to live on, they're usually not doing all the upkeep, the environmental upkeep unless they're kind of told to that you have to do

this sort of stuff. So it really didn't make a lot of sense for us, but there are people going out and building and buying and kind of rolling up a portfolio of 10 to 20 of these things and kind of trying to to package them together and kind of sell them off to come to the bigger guys. Similar to any other private equity roll-up strategy, right? If you can start, if you have 10 or 20 in a geographically defined zone where you can get a supplier and work with a supplier to kind of get your costs down, right? Like, especially, I mean, the fuel is a throughput business.

Sell as much as you possibly can and try to keep those margins, you know, a little over 10, you know, obviously ride those prices on the way up, pass along to the consumer and be slow on the way down. But, you know, being able to roll them up and buy the ones. put some money in where you need it. And, you know, the fuel is where you're spending the majority of your, of your capital when you're looking at the CAPEX stuff, just getting fuel onboarded and keeping that rolling. So being able to do that and work with your suppliers in order to get stuff in the ground, obviously has its advantages.

But it's tough, you know, to have one or two of these and do it and make enough money. But, you know, I'd say the onesie-to-Z guys are kind of few and far between now. They're still around. But I would say probably in the smaller areas. If you've got a great gas station, people are coming in and then. trying to buy it from you. And when you can get, you know, kind of mid-teens type multiples on EBTA, why not, right? Those aren't going to last forever. Yeah, that's wild. Well, this is a good place to wrap up. Tanner, really, really thankful for you joining us. How can folks who listen to

acquisitions anonymous and who follow us on Twitter, how can they support you or connect with you or just keep up with you? Sure. I have a Twitter. I'm not as good as Girdley on Twitter yet. I'm what they call a lurker. I just sit and read a lot of news. It's just at, you know, at Tanner Doss on Twitter. I'm trying to do more of it. Get on there and interact. I think it's been fun for not only seeing deals for my venture fund, which is El Cap Holdings, but just getting on and talking to people and learning from everyone in this business. It's been fun. Yeah, man. Well, we're really glad that you're willing to join us and that you're here. And thanks for teach us a little bit about truck stops. I hope you learned something, but I appreciate it. Dude, this is going to go down.

I love the truck stop episode. I learned a lot about trucks stop me. And I mean, I was just super shocked to see both of these listings we looked at, had much higher margins from fuel than I had potentially imagined. And it's just like, it's like, oh, okay, like resetting my brain in terms of how to think about this market. So super cool. And thanks for doing this. Yeah, absolutely.

All right. We'll be back next week. Thanks, everybody.