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.