Porcelain God: The Buc-ee’s Empire
How a gas station developed a cult following by cleaning its bathrooms
In 1982, 23 year-old Arch “Beaver” Aplin wrote a hot check, bought land in Lake Jackson, and launched a Texan gas station empire (1).
Today, Aplin has no problems clearing his checks and Buc-ee’s boasts 32 locations throughout Texas. Some are as large as 60,000 square feet and attract nearly two million cars per year. Though company financials are private, new stores are estimated to generate $12-20M in annual sales (2), and Buc-ee’s continues to methodically open new locations along the Texan freeway system at a rate of approximately two per year.
Along the way, Buc-ee’s created an iconic brand and developed a cult following with a unique business model and creative advertising. But it all started in the bathroom.
Buc-ee’s Business Model
Mr. Aplin says he realized the traveling public would drive a little farther for the promise of a super-scrubbed restroom (3)
Part one of the Buc-ee’s business model is to make the gas station a destination instead of a necessity. That starts with clean bathrooms. The Wall Street Journal called Buc-ee’s “gleaming” toilets its “pièce de résistance.” Buc-ee’s website has an entire page devoted to “cleanest restroom” awards it has won – including a 2012 laurel for “best bathrooms in the country”
Beyond the bathroom, the shopping experience is pleasant – the stores, while busy, are not over-crowded and there are not long lines at the gas pumps. Visiting a Buc-ee’s recalls a trip to a tourist destination more than a gas station – Texan décor fills the store, and even the bathrooms are filled with art.
Buc-ee’s acquires new customers with aggressive branding and creative advertising. The Buc-ee beaver logo is ubiquitous on hats, shirts, coolers, and countless other memorabilia. Its advertising is cheeky and humorous, often referencing the clean bathrooms.
Part Two of Buc-ee’s business model is to focus on “inside” sales. Aplin estimates that a typical gas station makes two-thirds of its revenue from gas. Buc-ee’s’ ratio is flipped – 2/3 of its revenue comes from “inside” sales (4). These include convenience store standards like potato chips and pop, but it also includes Buc-ee’s branded snacks like camouflage-colored popcorn, Beaver Nuggets, and branded beef jerkey (there’s even a recipe list https://www.buc-ees.com/recipes.php), as well as merchandise ranging from hats to headphones.
Buc-ee’s Operating Model
The first tenet of Buc-ee’s operating model is the stores themselves. Buc-ee’s are enormous, well-staffed, well-lit, and state-of-the art – words not commonly associated with gas stations. This serves the business model well – large, well-staffed stores help avoid crowded stores or long lines at the register. 18-wheelers are forbidden from the parking lots and gas pumps to ensure that minivans and pickup trucks don’t have to wait in line or deal with traffic jams.
The second tenet is Buc-ee’s staffing model. Buc-ee’s employees are paid handsomely, with starting salaries nearly 50% above minimum wage and 40% above industry averages (5). Paying well helps Buc-ee’s deliver “friendly” service and further contributes to the experiential nature of a Buc-ee’s visit.
The employees are also useful for cleaning bathrooms. “There’s literally someone in there (cleaning) all the time,” says Aplin. While expensive, this investment in cleanliness is necessary to reinforce the core of the business model (6).
The final tenet of Buc-ee’s operating model is a deliberate approach to expansion. Buc-ee’s is effective at expanding for three reasons.
- Buc-ee’s picks its locations well. New stores are built “the right distance” from major cities, close enough to large populations, but far enough away so that land is cheap enough to afford multi-acre lots for the stores (7).
- Buc-ee’s is conservative with how it funds its expansion – typically using cash on its own balance sheet (8)
- Buc-ee’s business and operating models reinforce its expansion strategy. Its “destination” appeal allows it more flexibility in where it builds its stores. The fact that gas is a lower percent of revenue protects Buc-ee’s from some of the volatility associated with gas price fluctuations, making its future cash position more predictable.
It’s easy to laugh at the Buc-ee’s model because of the centrality of the bathroom to its story. But, while unsexy, Buc-ee’s clean bathrooms reveal important truths about a well-run business.
First, Buc-ee’s business and operating models reinforce each other. The stores it builds, the items it puts on the shelves, the people it hires, and the way it expands all enables and is enabled by its “gas station as an experience” model.
Second, Buc-ee’s realized out what customers really care about. Most of us don’t think about the brands of the gas stations we stop at, but we all hate their dirty bathrooms. Aplin realized that a traveling salesperson will drive out of his way so he can change into his suit in a clean bathroom. A road-tripping mother will tell her kids to “hold it” for another half-hour so she can use a clean toilet. Most gas-stations see their bathrooms as an afterthought, but their customers don’t, and neither does Aplin.
Student comments on Porcelain God: The Buc-ee’s Empire
Love that you wrote about this! I had a friend from Texas wore a Buc-ee’s shirt all the time. I have been to one and the concept blew my mind. It really is a tourist trap designed around bathrooms. I am very curious to know how they got the initial “cult” following. I am curious if you think this model is scalable and if they can continue to maintain such an enthusiastic clientele. Way to chose a unique business to look into! Important to remember that a simple change to a standard offering can create a lot of value to people.
Thanks Bryan! Glad you found the business interesting.
Great questions – I’d say that Buc-ee’s “cult” status probably resulted from its effective branding (cute logo, funny slogans…) along with a little luck. The fact that your buddy is wearing a gas station t-shirt around speaks to that, as you allude.
I think the business is scalable, but I do wonder if it’s somewhat regionally constrained. They’re also not willing to franchise which makes expansion somewhat more challenging.
Thanks for commenting!
Such an interesting concept! I’m curious if you think the model would work in more urban areas rather than on road trip locations. I’m picturing a smaller scale Buc-ees for cities that could use great bathroom stops but may not have the space for such large retail stores. Or, conversely, given their emphasis seems to be less on gas stations and more on the stores themselves, maybe Buc-ees could eventually consider opening free standing stores with excellent bathrooms in more urban areas sans the gas stations.
Thanks Steph! Those are really interesting questions to consider because they challenge the ‘border’ of what Buc-ee’s is. I would imagine they’ll never stop selling gas, just because their customer is a road-tripper, not someone strolling through a city. The urban question is interesting too – the biggest challenge, in my opinion, would be finding cities where land is available.
Thanks for the comment!
Buc’ees does have a more normal service station on Hwy-290 in Houston. I haven’t stopped there since there is a real full size Buc’ees just a few miles down the road and that is where I stop. Why do they have this station, maybe a test project since their fuel prices are pretty good. I’m sure there are the normal items to purchase in this normal station and I would bet that it has a very clean restroom although it may only be a very small one. I’m not sure about the putting a Buc’ees only where property is cheap. In Baytown texas,Buc’ees has their largest building and 90 gas pumps on the freeway one exit east of multiple truck stops. I don’t think this would be a cheaper property since it is on the freeway and in Baytown. I would have though maybe 20 miles east of this location would be better but maybe they want to get local trade to purchase items inside the store. I did notice they do carry a small produce section. One item that was missed in the discussion on making a following of Buc’ees is the fact they do not allow trucks to use their parking lot or facilities. I think bathrooms, no trucks, novelty branded items, good food, very large selection of food all contribute to the success of Buc’ees.
As you pointed out, Buc-ee’s success is directly related to its ability to empathize with the consumer. The best evidence of consumer empathy is the focus on ensuring clean bathrooms in all of their locations. Prior to reading about Buc-ee’s, I would never thought of clean bathrooms as a means to create value for consumers. With that said, clean bathrooms are not a defensible position. The barriers to competition are low since any gas station can provide clean bathrooms. For Buc-ee’s success to be sustained, the firm needs to deliver more value than clean bathrooms. You also pointed out that Buc-ee’s differs from other gas stations since 2/3 of their revenue comes from “inside” sales where as other gas stations only earn 1/3 of revenue from “inside” sales. This gives me confidence in their business model since selecting merchandise that resonates with customers is more defensible than clean bathrooms. One concern of mine is Buc-ee’s decision to solely fund growth through cash on the balance sheet. The decision to only self-fund growth means the speed with which Buc-ee’s can grow is limited. By using only cash, Buc-ee’s provides an opportunity to another firm to grow faster than Buc-ee’s by raising external capital in the form of equity or debt. If Buc-ee’s only uses cash, they need to be sure that other competitors will not beat them to the markets where they hope to expand.
Hey Obi, thanks for your comments. I had the same major takeaway regarding empathy.
Regarding defensibility of bathrooms, I would say two things. One, I think the entire brand is the real differentiator at this point – beyond just the bathrooms. Remember that people are driving miles out of their way to go here – the bathrooms are only valuable insomuch as they draw customers. Two, I think keeping a store like this clean is more expensive than most gas stations can afford. Buc-ee’s can afford to staff their stores because they sell so much merchandise in addition to gas, which they can only do because of their brand equity.
Regarding financing new stores, I’m speculating somewhat, because the company is private, but I think part of their conservatism has to do with controlling the store experience. They refuse to franchise, for instance, because they want to control the customer experience, upon which the whole business rests.
Thanks for the comment!
Great case, Mike. Over the course of TOM and RC year in general, one of the processes I found most powerful was going back to basics and defining what a product actually is. This is a classic case of a business founder understanding that, at the end of the day, a product is a way to deliver value, and productizing something that hadn’t been thought as a way to deliver value before. As you alluded to with the revenue/ops model, this business model of flipping the value proposition of a Gas Station on it’s head would not be easy to replicate by competitors who operate differently. With that said, what do you think it would take for this value proposition to be eroded by competition? Where do you think the next area of innovation is for the company?
Hey Jeremy – thanks for the comment and really well-stated point.
Regarding competition and threads, I think the biggest risk would be if Buc-ee’s lost control of the customer experience and eroded their brand in the process. This is the reason they don’t franchise, as I mentioned in a comment above. I think a small gas station would struggle to afford the cost of keeping a store spic-n-span without the extra revenue from merchandise and “inside sales”. I think a supermarket like Walmart could compete, but lacks the feverish brand loyalty. So I think the biggest external threat would be something like the roadside stops mentioned in this article: http://www.wsj.com/articles/SB10000872396390444914904577623862863808508 – all of which have very similar models to Buc-ee’s.
In regards to innovation, I personally don’t think the business has aspirations to expand its business model. I would look more to see them stick to their bread and butter, but expand geographically throughout the southwest.
Thanks for the comment!
I love this. Keep it simple. Give the people what they want and something they can rely on. I wonder how they are found though. Some know the route and will hold out for one of their locations as opposed to using a competitor, but to do that they have to be assured that a location is close-by. For more casual drivers, how do they know that they should hold out? I’m wondering if any part of their operating model involves consistently having locations in every major rest stop so people know they can expect one there, or, if not, how they go about picking some locations and not others.
Hey Roxy – thanks for the great comment.
I wish I knew a bit more about exactly how they pick their locations because I agree that it’s a really interesting / important question. Based on what they’ve done, it seems like they’re slowly expanding along major highways coming out of Houston. But I’m not sure what they think the right space between two stores is.
Their roadside marketing (billboards) are huge in terms of getting people to “hold it” – sometimes even explicitly saying “x miles to Buc-ee’s” – worth a google for some funny ones.
Kudos to you Streit – when I read this I immediately regretted not thinking about writing about Bucees. Bucees is, in my mind, the perfect alignment of business and operating models. Everything about Bucees, from the oversized rows and rows of gas pumps to the gigantic bathroom and immaculately clean store with aisles stuffed with interesting merchandise works in unison to create a reprieve and oasis for the weary traveler. For me personally, I will drive an extra 100 miles and hold my pee so I can experiecne Bucees. The employees at Bucees are all so much happier than your typical gas station employee, and the high energy in the stores rubs off on everyone in the store. What I’m curious about is why they haven’t expanded at a faster rate – it seems like they could find areas that could generate enough traffic all along the I-10 interstate from Texas to Florida, and they have surely built up enough brand equity in Texas to spill over to neighboring states such as Oklahoma and Louisiana.
Hey Aaron – thanks for the comment and for corroborating my claims about customers driving out of their way!
I have similar curiosity about why they’re not expanding faster and agree with you regarding the brand equity spillover. My sense is that they are extremely deliberate and conservative because they can’t afford to have any stores deliver anything less than a top notch experience. Maybe they think they’d lose control if they moved loo fast.
Thanks for the comment !
Partner, great piece. I had no idea about this business and they clearly have developed a cult-like following. As someone who has not had the pleasure of stopping at a Bucc-ee’s before, I am left wondering what makes this model particularly hard to replicate. Yes, they have a loyal customer base but from the sounds of it there isn’t anything that is distinctly hard to recreate. Still, they must be doing something right. Thanks again for writing about this.
Thanks Abe for the good comment. I’m not sure it’s entirely defensible, as you point out. That said, I think two things help protect it. The first is the strength of their brand – which pulls customers in from miles away. That’s hard to replicate over night. The second is the cost of managing a store like Buc-ee’s does. They can afford it because they sell so much merchandise, but a new entrant would have to fund their staffing somehow.
Thanks for great comment!