Convenience Store News
by John Lofstock
May 25, 1998
On the “Fas” Track
Southern Express acquired Fas Mart just three months ago, but the retailer intends to keep growing. Its latest goal: $1 billion in annual sales.
by John Lofstock
Owais Dagra entered the convenience store with little more than the money in his pocket, a relentless work ethic and concise goals to build a successful business.
Owais Dagra’s hard work turned around one fledgling store and parlayed it into a thriving 67-store chain with more than $150 million in annual revenue. As was the case when he had just one store, Dagra still has big plans, works long hours and has visions of $1 billion in annual sales.
“It has been a very exciting time for our company and I’m very proud of the team effort it took for us to expand our operations,” said Owais Dagra, chief executive officer of Mechanicsville, VA. based Fas Mart Convenience Stores Inc. “We have plans to expand quickly, to buy and build our way to the $1 billion mark through a focused and aggressive strategy of acquisitions and new-store developments.”
Owais Dagra founded Southern Retailers Inc., operator of 22 Southern Express c-stores in Richmond, VA. area, which went on to purchase 42 Fas Mart c-stores in February.
Owais Dagra merged all of the stores under the Fas Mart name and image to capitalize on its brand equity and proprietary foodservices program, “Fas Mart Café.”Now, with 650 employees and respectability in the marketplace, Owais Dagra feels he is ready to broaden his current marketing plan beyond Virginia with new stores and new programs.
“We are taking the best characteristics of two successful companies and blending them into one premier force in the marketplace,” Owais Dagra said. “The combination of our size and our approach to operations will create a consistent level of service across the chain – all of which will enhance our position in the convenience market.”
How It All Began
How Owais Dagra got started is a true American “rags to riches” success story. Born in Pakistan, Owais Dagra moved to the United States in 1990. After working several odd jobs, he decided to go into the c-store business for himself. He purchased one store, called Shannon Express Mart – which was not profitable – from a local chain that was rapidly losing money.
Characteristic of his nature, Dagra was confident he could nurture the store back to profitability.
“My first store was in a local suburban neighborhood that was a pure c-store with no gasoline,” recalled Owais Dagra. “I was new to the industry and had a lot to learn, but I immediately recognized the potential this store had.”
What Owais Dagra learned was that the convenience industry is demanding physically and mentally, good help is hard to find and customers are very picky about where they buy their food. “I worked 18-hour days, running the register, merchandising, stocking, housekeeping, ally shopping at the banking, you name it,” Owais Dagra said. “But I was able to turn that store around pretty quickly through some cost efficiencies, margin enhancements and sales growth.”
The store began to turn a profit in just six months. One of the problems the previous owners had was they were trying to operate the store as a superette. They were working on lower margins and trying to compete with the supermarket segment.
Owais Dagra stepped in and put an emphasis on the high-profit categories and focused on a c-store pricing profile versus a supermarket pricing profile. “The store needed some individual attention,” he said. “The customers that were shopping at the store were re store were really shopping there for convenience and not for value – not from a price-point standpoint. We fine-tuned the merchandise mix and pricing to reflect consumer habits and shopping patterns. That helped significantly.”
By the end of 1990, Dagra had a profitable business and decided to stay committed to the industry long term. He was faced with a couple of options: go out and buy another store and grow one store at a time, or try to purchase a multiple-unit operation.
Due to a lack of capital to invest, building one store at a time was not cost-effective. Plus, Owais Dagra would have to spend just as much time developing a management system and corporate structure from scratch as he would operating the stores. He realized that left little time for small things like family and sleep. He decided making a multi-unit acquisition was the best approach.
“The big challenge once we decided to go after small chain of stores was finding one that was willing to lend us money,”Owais Dagra said.
His persistence paid off in mid 1991 when he came across U-Totem, a 14-store chain that was bankrupt and antiquated. “U-Totem had one high-volume profitable store that barely kept the entire chain going,” Owais Dagra said. “They decided to sell that store separately but there weren’t many takers for the other 13, “Although the stores were still furnished with 1950s and 1960s features, run-down and void of fuel facilities, Owais Dagra merely saw this as another obstacle en route to bigger and better things. “They had the one thing we needed most and that was an infrastructure already in place,” he said. “From there, we could build upon the positive features and slowly bring business back to respectability.”
But Owais Dagra found that even the best plans can’t get off the ground without money. He was turned down by 10 banks before he could secure a loan to make the acquisition. “Many people thought it was a bad investment. Some had bets we wouldn’t last six months. One was nice enough to give us a year,” he said.
It took Owais Dagra less than six months to prove the skeptics wrong. He immediately cut costs and operating procedures, developed a cluster –management system that utilized one manager for six stores instead of a manager at each store, and trained employees to handle customer-service issues relating to customers on a personal level.
Even though the stores were old and falling apart, he was able to make minor structural adjustments. Owais Dagra was able to enlist the help of vendors and suppliers to re-planogam the stores and replace slow-moving items with the ones customers wanted most.
“We were able to enhance margins and boost sales just by paying more attention to what was on the shelves,” said Owais Dagra. “By the end of 1991, all of the stores were stabilized to the point where the company wasn’t bleeding anymore.”