Regency turns to franchising to grow petrol business

Regency Petroleum Company Limited, RPL, is looking towards leasing and franchising arrangements to grow the business, now that it has four petrol stations fully operational and another, though delayed, expected to start pumping gas by late September.

Regency CEO Andrew Williams says RPL is currently doing better than forecast in its market prospectus issued in 2022.

“When it comes to our projections on revenues and profits for the company, I always want to be conservative. What we’ve seen now, is that we are at least 20 per cent ahead of projections at our new branches and even at our franchise location,” Williams said in an interview with the Financial Gleaner on the way forward for the petroleum marketing company, which distributes petrol and liquefied petroleum gas, or LPG.

Williams says the company’s next target for expansion was the north coast, including St Ann, where it is concluding discussions to establish a service station, and Montego Bay, where Regency has put in a bid to establish another station at Sangster International Airport.

“That will take care of the expansion that we want to do in the short to medium term – say 18 to 24 months. For the immediate term, we are looking at establishing a station at Clarendon where the new highway meets the old segment, off the highway. That will be done by a lease arrangement,” the Regency CEO said.

“Clarendon is definitely a straight lease agreement. For that location, the developer will build and we will lease back from him and run the station. There will be no capital outlay for us. It will be a long-term lease agreement,” Williams said.

The service station will be part of a complex to be developed by Kurbiton Limited, led by Bilton Graham.

Plans for the 115-acre complex include prospective space for Burger King and KFC outlets, warehousing, and a Tyre Warehouse location. The development is pending approval from the regulatory and municipal authorities.

“Those are the companies that have so far shown interest in the project. The location is one of the entrances to May Pen and is logistically ideal, since it is adjacent to the highway,” Graham told the Financial Gleaner.

For its LPG operations, Regency Petroleum operates a filling plant that takes up a portion of a 170-acre property at Crawford, near the St Elizabeth-Westmorland border. The plant has a capacity of 30,000 litres of storage and is capable of filling 1,200 25lb cylinders per day, Williams said.

Currently, planning approval is being sought to establish a truck stop and service station at Crawford. The location will soon boast a restaurant and rest facilities for long-haul travellers. The service station will operate under a franchise agreement.

Since July, another service station at Whithorn, Westmoreland, was rebranded to Regency Petroleum, and the Crawford arrangement will mirror that deal, he said.

The Whithorn service station has been in operation for about 15 years. It is owned by Deltonio Williams and operated through DW Peoples Choice Limited. Previously, the station was branded as Petcom before it was changed to FESCO, and now Regency Petroleum.

The Whithorn location brings the network to four petrol stations, all based in Westmoreland. The fifth one, now set to open by September, will be in Kingston.

Williams says Regency will still pursue opportunities to build, own and operate other service stations, but sees franchising as the quickest route to increased volumes, more revenue and higher profit.

For the second quarter ended June, Regency Petroleum generated $482 million in sales, a 168 per cent increase over the $180 million earned in 2023, the company said in its latest report to shareholders.

The spike resulted from the addition of two petrol stations in the period.

“This translated to a significant increase in volume sold on a year-over-year basis. We also benefited from expanded LPG sales through our partnership with JusGas Distributors Limited, which has catalysed additional sales in eastern Jamaica,” Regency said.

The company has a distribution partnership with JusGas, which Williams says gives Regency access to equipment it doesn’t have, specifically a tractor-trailer rig that’s used for large volumes and long-haul cargo; as well as three smaller trucks called ‘bobtails’, which add to the single bobtail that Regency itself owns.

Regency will be targeting more uptake in domestic LPG, also called cooking gas, since it has adequate numbers of tanks to supply the market, Williams said.

neville.graham@gleanerjm.com