The Koerner Office - Business Ideas and Deep Dives with Chris Koerner - Deep Dive into the Gas Delivery Business. Ep. #91

Episode Date: November 13, 2024

I sat down with Korey McDavid, founder of Juiced Fuel (https://juicedfuel.com/), to discuss the ins and outs of the mobile fuel delivery business. Korey shares how he came up with the idea, how he launched with under $100,000, and what it takes to manage a business that's breaking new ground in personal and marine fuel delivery. We also talk about the challenges of building a custom app, securing the first customers, and scaling.Timestamps below. Enjoy!---Watch this on YouTube instead here: tkopod.co/p-ytAsk me a question on or off the show here: http://tkopod.co/p-askLearn more about me: http://tkopod.co/p-cjkLearn about my company: http://tkopod.co/p-cofFollow me on Twitter here: http://tkopod.co/p-xFree weekly business ideas newsletter: http://tkopod.co/p-nlShare this podcast: http://tkopod.co/p-allScrape small business data: http://tkopod.co/p-os---00:00 Introduction to Juice Fuel and Its Origins04:46 The Development of the Mobile Fuel Delivery App10:00 Customer Acquisition and Initial Challenges15:13 Pricing Strategy and Revenue Model20:04 Future Expansion Plans and Market Positioning25:00 Advice for Aspiring Entrepreneurs

What is your churn like? If you get a residential customer, one of those deals where, like, they just fall in love with it. Like, I don't know how I ever live without this. And they almost exclusively fill up with you. Or is it kind of like people try it? They use you sometimes. There was no one who's taking care of both. No one's taking care of small businesses. No one taking care of personal vehicles. Before I did any of that, we run some Facebook ads. What are your revenues like right now? One family will spend about $5,000 with you over a year. How many refills do you do per month for an average family? Well, why don't we start by you just telling me who you are and what you do? Yeah, Corey McDavid. I am the founder of Juice Fuel.

We are a mobile fuel delivery service. Okay. And how long have you been in business? Almost two years now. And what gave you the idea to start that? So it started with my wife. We had just had her second child and she hated going to the gas station. She drove a diesel SUV.

You know, there's less diesel pumps. So a lot of times you're waiting on the diesel pump to open up and, you know, crying kids, you know, hot in South Carolina. She just hated the whole experience. But also at the time I was a terminal manager for the bulk liquids terminal here in Charleston that brings in all the fuel to the greater Charleston area. So my day job was literally like monitoring the, you know, who the suppliers were, who their customers were, which gas customers could actually move the needle. in the area. And that just got me looking into, you know, seeing how we could move more barrels across our rack. You know, that was my main job. But in doing that research, I saw that there was really no one that was supplying fuel to the little guys. Like, if you were moving a ton of fuel,

there's plenty of suppliers that'll bring you, bring you gas. You got a big tank on your yard because you run a big construction company or something. There are guys that will supply that. But there was no one who's taking care of boats. No one's taking care of small businesses. No one taking care of personal vehicles. And so when my wife was having this problem, I was like, I'm the guy to fix this solution and make it better for everyone.

Yeah, you're like, of all people, I'm the one most qualified to fix this problem. Yeah. Yeah. No one can. Now, was there ever a moment where you kind of were thinking about this idea and then you saw a truck driving around doing mobile fuel delivery and you're like, oh, this is a thing? Yes.

So when I started thinking about the idea, you know, of course, you dive into research and you find companies doing it across the country. And it seemed to be like it was a growing trend, but it was just like just becoming popular. And I know people have tried it in the past and never worked out for one reason or another. But it seemed to be gaining in popularity. I mean, certainly coming out of COVID. like delivery services and convenience and anything that could like keep you safer and limiting interaction with you know things that like a gas pump that everyone in the public has to interact with

was becoming popular and so we're kind of able to jump in on that that trend but you know the mobility services and delivery has been a growing trend for you know decades now and so why not gas like why is gas not a part of that? It's something that we need, you know, every day. Did you know of anyone doing it in Charleston? No one was doing it the way that I envisioned, which is kind of what we're doing now. I did, I remember one time,

so I was also in the South Carolina Guard at the time, and I remember making one of my trips up to Columbia, South Carolina to do my flying. I passed this truck and I won't say the name of this company, but they're a small fuel delivery company. I was like, boom, someone's thinking like I am. But it wasn't like, oh, they beat me to it. I can't do this idea now.

You know, like, there's plenty. There's plenty for us to all eat, you know, like I can't service every customer and Charleston neither can another company. So plenty of room to growth and plenty of room for competition. How long after you saw that truck were you in business? I don't really remember that. Because it wasn't, there was some, there was some reasons why, like, from, from idea to napkin sketch to, like, actual launch was probably like a two-year process.

But that wasn't because I was, like, planning the whole time. You know, I had a career change and, you know, just put it on the back burner because, you know, life, you know, trying to de-risk, you know, how I'm going to. pay for the mortgage and also, you know, start up this business. So that, that was really why I took the time. And but yeah, we launched and we delivered our first gallon December of 22. I always say beginning of 23 was our like first month in business. And so we're coming up on two years now. Okay. When you first started, did you quit your job? Did you do this on the side? What did that look No, I do it on the side.

And fortunately, I work remote and I'm able to manage both. I have a lot of support from, you know, my family and to able help. But yeah, literally the whole first year was, you know, me and my spare time making deliveries and just kind of fine-tuning the equipment, the operation, our app, you know, the financials, all of that. And so then after that first year, my brother graduated from Clemson and I convinced him to come on full time. So now I got a full time guy doing that. And so it's allowing me to continue my day job and then focus on growing the business on the side without having to be in the truck making those deliveries. Okay. So you still have your job then?

Still have my job. Yep. Okay. Did you say you have an app? Yeah. Yeah. What did that look like? Like how much of the cost to develop that?

And what all does it do? We started through a call, we'll call it an incubator that kind of helped me get going. And part of their offering was they would help me build the MVP version of the app. And so once I got that delivered to me, I remember it was very limited from what I had explained, the scope to look like this was not it. I couldn't even actually take orders and process payment in it. But they were like, no, you just need to get it out there. And I'm saying, no, I can't even take payment on this. It doesn't work.

But, you know, and messing around in the back end, I was able to, I don't know if the developer left an Easter egg for me or, you know, it was just there by accident. But I reached out to him. And I was like, hey, well, do you want to come work on this with me? Like, just us. And he was all about it. And so he's still working with us today. But the app allows us to take orders, make requests. So schedule, send out push notifications.

So how it works is customer signs up. They can insert their fuel, their vehicle types. They can make a request. A driver will claim that request. They get notified that the request has been received. And then the driver will notify them when they're on the way. And then when they're complete. And then they can see their invoice, you know, how much they were

charge and all that. Okay. So I would imagine your app is pretty simple. Like you're querying a database of makes and models, years, colors, maybe like plate number or whatnot or no. Yeah. Anything that can help us, you know, get, make sure that we're delivering to the right place.

You know, we don't, we don't do just vehicles. So, you know, think generators or boats or, you know, excavators or something. So we have like a special note section where they can just. put all that info in there, gate codes for access to certain places. And then they can pay from the app and schedule it? Yep. Okay. Yep.

Schedule and payments all done through this. Okay. So when you first started, what did it like buying your first asset look like? Did you buy a truck? Did you buy a tank? How much did that cost? Did you retrofit a truck? How much all in did it cost?

And what did that process look like? Well, the first thing I bought was the app, you know, had that first. And then I was able to kind of show people. the idea and like let them play with this like functioning version of it and so they they could start to see the utility of it and I was able to take that and do like my first call family friends round and we were able to raise 100 grand and that allowed me to buy my first scheme which is the equipment that drops into the truck bed so that gave me two tanks you know pump metering system hose all that everything we needed to actually deliver the fuel then I bought a truck I would say I

all in. You know, it was a used truck, paid like 40 grand for it. And the skid cost me, you know, another 20, you know, that app. That part of the process, we were probably 10, maybe 15 grand into it. So we were able to get gone for less than 100 grand and start actually, you know, making money. How many gallons is your skid? Our current configuration, we can hold 400 gallons per skid. They come in 119 gallon compartments, separate tanks. Okay. So 400, is that like 400 on a truck then? Like in a truck bed? Yeah. Wow. So that's like 2,500 pounds or a gas. Yeah, 2,600. Yeah. Jeez. Okay. All right. So you develop the app first. You get people playing around on it, trying to break it. It works. You get the truck. You get the skid. You're in business. You never quit your job.

how do you get your first customers? I guess back up a little bit. We had run some, before I did any of that, we run some Facebook ads just to see if there was any sort of appetite in our area. And we put up a landing page and was actually getting people like clicking on the ad and then submitting their information to try to sign up for this business that didn't exist yet.

And so I use that click through rate that we were able to establish over a few weeks. of testing. I mean, modeled out the next three years of what I thought. Yeah. And how has that gone? Very accurate or no? It was way off, but yeah, it gave me enough. You know, I felt like it was viable. And so I was willing to make the investment. And then I did all the things we talked about. But so getting getting my first customers was, yeah, start running those ads again, except for, you know, we could actually deliver. And then mostly word of mouth. I remember like our first stranger customer. Oh my God. We don't know who this person is. Yeah. Yeah. And that was really exciting.

How much time had elapsed between when you got the leads from the Facebook ads and you were actually able to deliver on them? So gas is a, it's a weird one. And this is a like, I don't know, how not really unique, but a challenge that we definitely have to deal with is like people hear about. us and like, oh, that's a really great idea. I would love that. Oh, but I don't need gas right now. So they don't sign up. Who doesn't need gas right now?

Like, you don't need it now. You'll need it in two days. Like what? Right. And so then when they do need it, they're like, oh, I need it now. Like, I don't have time to like figure out this app and make a request and wait several hours. And so that was, you know, a unique challenge. Took some education to like trying to get, get people to change your habits of like,

Don't wait till you're on E like get in there, make the request. And then, you know, your gas station experience is literally you get home and press a couple buttons and it's done. All right. If you were watching this clip right now, you are watching this on YouTube. And if you are a fan of podcasts, please check on my podcast while you're at it because sometimes I have podcasts that aren't on YouTube and sometimes I have YouTube that aren't on podcasts. So check out the Kerner office on any podcast platform or you can go to tkopod.com.

Also my newsletter will throw that in there. There are no ads. It's weekly. it's different content than my podcast and YouTube newsletter. com. You'll see the link and we'll see you there. So how much time was that then? Because I'm thinking like if I opt into some service like this from a Facebook ad and any more

than like a week passes like it's out of sight, out of mind. It's going to be really hard to convert me at that point. Initial sign up to delivery was within days. I mean, even when you were just running the test to the landing page? Yeah. We didn't have any sort of like funnel to like nurture these ads. It was like sign up, sign up and then you can make a request right from there. And so it was pretty instant.

And I remember like initial launch, you know, we were able to get like our first dozen or so customers. And then it was like, okay, now what? You know, how do we, how we keep growing? And it was it was just me, spare time. So like, you know, how do we manage the expectation of the customer? you know, when I still had to work a job. And so we were really careful about not growing too quickly, but also, you know, keeping every customer happy.

Because what we're really building is, you know, reoccurring, repeatable revenue. Like gas is a commodity and it's low margin business. So you've really got to start stacking those customers and building that revenue. And so that's the most important thing was like getting our customers, on board, getting their trust, getting them in the habit of making the request,

and then all of a sudden, all their fuel spend is now with us, and now we can start getting new customers. You know, each we found in our first year, like an average vehicle, it's like $2,500 a year. So if you're a family, two vehicles, daily drivers, it's like $5,000 a year.

So if our margin, you know, it was 15, 20% on a subscriber like that, you know, you could do the math on how many customers you need. And also made us realize, like, you know, the residential side was how we started, but that wasn't that wasn't going to be viable long term. Like, we had to start finding some higher, higher margin options and some bigger ticket items, you know, and that's when we started getting into the fleets and then ultimately into boats. Okay. All right. So let's talk about your your pricing and your margins and all that because 24 bucks a month, two vehicles, five bucks a month to add additional vehicles, fuel price based off of lowest price within three miles.

Do you mark the gas up? Do you buy it wholesale? What are your margins like on both the monthly flat fee and the gas? Well, I don't know how much I want to get into the specifics of the gas prices. I mean, we certainly sell the gas for more than what we get it for. I know that even a gas station doesn't make much money on gas, right? And they buy a pretty big volume. So what is just what does that look like for you?

The average margin on just regular gas is is like 15 to 20 cents. We try to get that up to 30 cents. So 30 cents per gallon is the goal. It's tough to do on regular gas because like I said, it's it's the replacement opportunities are so easy. There's gas stations all over the place. And the only differentiator between, you know, the gas station next door and the gas station a little bit further down is the price, you know. And so you're constantly competing with that price.

And so my idea was, you know, keeping the overhead extremely low and being able to, you know, make a little bit more margin because of that. Okay. So one family will spend about $5,000 with you over a year. That's what you said? Okay. How many refills do you do per month for an average family? Typical is like once a week, maybe once every 10 days.

So three to four, three to four refills a month. I will say some customers, you know, we didn't put enough guardrails up. So like they take advantage. Some customers, yeah. One vehicle will fill up at work. One vehicle will fill out at home. Oh. So we'll get, we'll get requests for the same.

subscriber at two different locations on the same day. And I was like, come up. Yeah. So since it says the fuel price is based on the closest gas station, basically, are you, you're not filling up at a gas station. Are you in reselling it or are you using like your, your employer to fill up? We're buying wholesale. Okay. Okay. So you're just using that price to base what you charge them because that's kind of like the market price for their neighborhood or whatever. That's right. And we're kind of getting away from that. we haven't fully like relaunched our pricing updates but you know in order to match the lowest in your area like you're using software like gas buddy or you know ways or somewhere that publishes gas and they're reliant on you know third party inputs that you're either out of date fat fingered

and then are you talking about cash price or credit prices it's too unreliable and so we're just going to start doing a fixed price. Yeah, smart. I know there's like one or two nationwide brands. Is that how they do it? Because I've learned in companies I've started where I see like a big player doing doing it one way. And it's like, oh, what are they doing? Oh, they're so dumb. Like no one likes that. I'm going to do it this way. Like I'm going to be so innovative. I'm going to reinvent this market. And then I get six months down the road. I'm like, this is terrible. That's why they do it that way. I should have just copied them exactly. I've learned that. So many times. Have you had learnings like that?

Yeah, it's, it's, you know, I feel like the pricing on fuel is, is kind of, it's always like the secret sauce. Like, you can't figure out why someone is pricing it this way. Like, is it a loss leader for a gas station so that you come in and get a chicken sandwich instead, you know, and, and so I see other fuel delivery companies, they don't necessarily advertise their per gallon price in every market is, you know, very different. You know, Charleston doesn't have a pipeline that comes to Charleston. So everything comes in by ship. So if you go further west and you're receiving barrels off the pipe,

it's your pricing is going to be different depending on the season. We've really just run with that. What you just read is our pricing and it's still our current pricing. And it hasn't changed for the first two years because the price of gas is almost de minimis at this point. Like, we are really building trust and a brand and getting that customer base up. Mm-hmm. Mm-hmm.

So what you mentioned boats, is that kind of where this is heading or are you trying to lean more into the fleet delivery stuff? We're trying to do it all. You know, those are like our three business lines. Right now, it's, you know, I've got a team of four and we're handling all three of those simultaneously. At some point, it will be, you know, Marine fleet, and then residential will have to be separate. The marine side is certainly like where I feel like that's our bread and butter.

Like no one is offering the service that we're offering, being able to bring out the volume that we can and deliver it out to a dock without your boat having to leave that dock. there's no one in town that can do that. Yeah. Okay. What's next for the business? How do you see this scaling? More trucks in Charleston, different cities with more trucks, more boats, more fleets. Yeah.

So we definitely want to dominate locally, but we also plan on expanding. You know, I never meant juice to be just a local brand. You know, we intend to grow this as big. and as kind of starting at as wide as we can. Now, what does that look like exactly? You know, we're still trying to figure that out. We've gone viral several times on our social media. We're very transparent about, you know, how we started this business, what we do day to day.

We just share what we're doing. And people love it. People want to, we have people copying us. We have people who want to do juice in their city. And so, you know, franchising is probably the rest of. route that we'll go at some point because like I mentioned earlier, fuel was like very hyperlocal, the competitiveness of the price of fuel. And so you've got to like be in the community and know the community and know who could benefit from your services and be able to build the trust that,

you know, hey, when you're bringing the fuel, you're doing what you're saying you're doing. You know, when they go out to start their vehicle, it's going to start the next day because you delivered the right fuel. And so the only way you can do that, I think, is by having someone from the area who is, you know, willing to put in that work in a local market. I see it as a, like, perfect play for an owner-operator. Yeah. You know, think like a truck driver who he might be able to make, you know, 80 to 100 grand over the road, but he's gone all the time driving. And here he can still be a truck driver, but also own his own business.

potentially a lot more upside. So I feel like, you know, that is like the perfect, it's a perfect job for like, you know, an owner-operator to be able to scale his own business locally. And I think that's where we'll go. But certainly regionally, we're going to expand within our footprint as far as we can reach before I don't feel comfortable managing it all under, you know, original juice fuel umbrella. And then the natural progression is,

vertically integrate into the wholesale supply side, which, you know, that, that is my background. That makes the most sense. Once we're moving enough volume to justify, you know, being the wholesaler ourselves, now we can supply all of our own retail locations. What is your churn like? If you get a residential customer, are they, is it one of those deals where like they just fall in love with it? Like, I don't know how I ever lived without this. And they almost exclusively fill up with you? Or is it kind of like people try it? They use. use you sometimes. What's more normal?

The more normal is we have almost no chance. People sign up, they try it, they love it. Even the ones that don't use it very frequently, like, I mean, you read our pricing.

We're not, it's very reasonable. Yeah. Yeah. And so it's almost worth it for someone to use, to have it as an emergency service. You know, if it's raining one day and I don't want to get gas.

Yeah. Or, you know, someone to just have that peace of mind that, you know, fill up my daughter's car instead of, you know, having to give her a credit card, you know, to go to them from school or whatever. Yeah. So we do have some of those customers that don't use it very frequently, but rarely do we have someone sign up and just say, you know, this is too much of a hassle for me to make a request. You know, the tom slots are never available that I need. That really hasn't been the case. Okay. See, this is interesting because I would use this, but I wouldn't in a sense because I drive a Tesla. And I, aside from that, I love gas stations. Like, I walk into a gas station every time like a kid in the candy store, it's like, I'm going to get a Red Bull. I'm going to get some chips.

Like I eat like garbage when I walk into a gas station. So I would miss that. Are you planning to offer like charging services at some point or how have you thought about that? We certainly mentioned that. Like we're in the diligence phase of, you know, raising, capital right now for our expansion. And so that very question has been asked. And we're building a logistics network. So it was easy enough to put a generator on the back of a truck and offer that service. It's just not where our focus is. Just like, you know, I think a marketplace for mobile services will eventually where we're heading to. You know, if you're in our hat, every two weeks making a fuel request. And every time you sign in, it says what service are you looking for?

Fuel, tire, oil. And you're hitting fuel 95% of the time, but that time you need an oil change. Why are you not going to go back to that app and select oil change? So I think that is another way that we're looking at going. But right now, gas is where we're focused. And we want to be laser focused on that and do the best we can there. Yeah. Okay, man. Well, this is an awesome story. I appreciate you sharing it. Anything else that you would advise people to do? Like, what if someone in Sacramento wants to start this? What would you tell them to do that you wish you would have done differently when you started? I would start delivering the boats immediately.

Interesting. If I could do it over again, that's what I would do. Just because at least in our market, it's a huge demand that's that's unmet. And so that the sell is a lot easier. to convert one when getting gas and your boat on the water is, A, really expensive and be really inconvenient. And you're in Charleston, so, I mean, perfect market for that. That's where I would have started. But I always say to, I mean, honestly, this is for anyone interested in starting a business. It's like, you just, you just got to do it. You just got to dive in and go all.

And you'll figure it out along the way. working all out on day one or before you start. You just got to dive there. Just got to start. Yeah. Okay. Well, Corey, thank you. Where can everyone find you if they want to reach out?

Best place is our Instagram, follow along our story. Like I said, we post everything that we're doing every day. So very, very cool content there. So Juice Fuel on Instagram. Also, you can check out our website,

juicefuel.com. Okay. I did forget to ask. What are your revenues like right now? we'll hit 350,000 this year. Jeez, awesome. We're up almost 500% from year one. That's amazing.

Very low turn. Really looking forward to year three. Yeah. Okay. Well, thanks, Corey. I appreciate your time. Yeah. Nice to meet you.

Take care. Likewise. See it. All right. What did you think? Please share it with a friend. And we'll see you next time on the Kerner office.