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An Island Opportunity.

Byline: Tammy Mastroberte

Mike Ziegler is a serial entrepreneur with an eye for seeing potential and building a business to profitability. He instantly saw the potential in a small convenience store on the island of St. Croix in the U.S. Virgin Islands, and over the past four years, he and his business partner Dave Hilkes have created an award-winning location that is so much more than a typical c-store.

Ziegler grew up working in a community drugstore, which he helped build into a $40-million-a-year business while attending college. He then owned a bowling alley that he sold after it became profitable. He entered the c-store industry when a store in Indiana caught his eye. It was the only location selling groceries and automotive supplies for five miles, and the community was home to around 20,000 people.

Photography by Chris Smith

"It was basically the general store, grocery store, gas station and bait shop, and the closest Walmart or grocery store was 12 miles away," he explained. "The former owner had a gambling problem and went out of business, so my brother and I managed it and grew the business. We were doing really well, and about 85 percent of our profit was in-store and 15 percent was gas."

Never one to sit still for long, though, Ziegler started looking for a new challenge. He and his family wanted to move from the Midwest and knowing his brother could run the Indiana store, he began looking for his next business venture on brokers' websites. It was there that he spotted a c-store for sale in the Virgin Islands.

"We wanted a change from the Midwest area and were looking for something drastic," he recalled. "I came across this gas station in the Virgin Islands and it looked like there was an ocean in the background. My college roommate Dave Hilkes [had] told me if I was ever looking at another business and needed a partner to let him know, so I did. Nine months later, we moved."

Ziegler's search for a new city and business venture was documented on the HGTV television program, "House Hunters International." The episode is entitled "An Island Home in the Sun."

The island of St. Croix in the U.S. Virgin Islands is only 28 miles long by 7 miles wide, and has just 26 gas stations and 10 convenience stores. The store Ziegler purchased is the only one for the last eight miles of the island.

"For one-quarter of the island, I'm the only game in town," he explained. "When I saw this location, I knew I could replicate what I did in Indiana."

When he first visited the location, he saw three condo developments in the area and no other competition. Also, looking at the space and product lines, he immediately saw improvements he could make to boost profitability.

"I looked at the current product line and knew if I carried some different products and increased groceries, I could do well," he said. "I also thought the outdoor space was not being used properly and needed seating since the ocean was right in back of the store. I knew I could improve it."

Ziegler and his partner took over the St. Croix location in September 2009, and when his brother decided to go back to school, they sold the Indiana store in 2011.

Making Changes

Drawing upon the best practices he utilized in Indiana, Ziegler set to work revamping the St. Croix store. When he took over the Indiana site, he put up a "Coming Soon" sign and gutted the entire inside for a total makeover.

The c-store features an outdoor bar cleverly named The Libation Station.

Ziggy's Island Market is one of only 10 convenience stores on the island of St. Croix.

He quickly realized, however, this wasn't the approach to take on the island because the culture was completely different. He needed to make subtle changes over time.

"The culture of the island is slow-paced and people are hesitant to change," Ziegler explained. "They saw us coming from off the island to take over a place they had known for a long time, so we couldn't do anything quickly."

Once the deal was finalized, Ziegler closed the store that night, pulled all the shelves out to put up new and clean shelving, removed one-quarter of the merchandise that had expired, and put fresh product in. The store reopened the very next morning for its first day under new management.

"We never closed it down," he said. "Then, a couple of weeks later, we changed the signage outside and painted the store. We also kept the kitchen menu and only added a couple of items."

That was the beginning of Ziggy's Island Market in St. Croix.

As people got to know the new owners and felt more comfortable, they were able to completely change the inventory. Ziegler used H.T. Hackney Co. planograms, modifying them to the products accessible to the area.

"We multiplied the grocery business by five times what the previous owners were doing," Ziegler said.

Once the grocery business increased, he and his partner added a variety of new menu items to their foodservice selection, including barbecue pork, chicken salad and tuna salad.

"The clientele is a balance of islanders and stateside people who either relocated or are snow birds here on vacation," he noted. "We added more stateside products after our first year in business to accommodate them."

The store opens every morning at 5:30 a.m., closes at 8 p.m. and sells non-branded gasoline from four pumps. Ziggy's sells approximately 25,000 gallons of gas per month, and the profit is between 16 cents and 17 cents per gallon.

"We make more money per gallon here, but our volume is lower than in other areas," said Ziegler.

Outside the C-store Box

When Ziegler first took over the St. Croix store, he knew the space was not being utilized properly and wanted to expand the business. He noticed a crowd gathering every day to have a couple of beers and socialize. In fact, 20 people would be gathered outside, making it difficult for other people to get into the store. It's not illegal to have an open drink in the car while driving on the island, so it's common for people to stop for a couple of drinks and then drive home with one in their hand.

"I knew we needed more places for people to sit, eat and drink, and I wanted to open a bar. I went to the licensing department and got a license as a tavern. We knocked out a wall and built the bar with six bar stools, and covered the area adding four tables."

Ziegler's priority upon buying the business was to expand the grocery offering.

The Libation Station Bar, as it is now known, serves beer, wine and cocktails. Its happy hour, which runs Monday through Friday from 3 p.m. to 9 p.m. and Saturday from 12 p.m. to 8 p.m., was voted Best Happy Hour on St. Croix in 2012 and 2013.

When the bar first opened, Ziggy's hosted a benefit for the local Boys & Girl's Club, which included a johnnycake eating contest. (A johnnycake is a cornmeal flatbread).

Between 50 and 75 guests enjoyed food and drinks, with all the profits donated to the Boys & Girl's Club. Approximately $2,000 was collected. Since then, Ziggy's Island Market has decided to host the event every year. Last year, the event attracted 400 people and raised $6,000, according to Ziegler.

"We host a lot of charity events, including raising money for an orphanage and a women's coalition," he said.

Ziggy's also holds seasonal events such as Oktoberfest, during which the store shuts down for half the day, food is served and a polka band entertains guests. Souvenir beer mugs and special Oktoberfest T-shirts are also sold. The event usually draws between 300 and 400 people each year.

The Libation Station Bar's normal hours are from 2 p.m. until 9 p.m., but it stays open later for special events, such as Oktoberfest or a charity event. Last New Year's Eve, the bar stayed open until 9 a.m. on New Year's Day, said Ziegler.

Following the addition of the bar, the owners expanded the outdoor space even further, adding a deck on the back that faces the ocean, as well as a pool table and darts for customers. The store itself is 600 square feet, while the deck is 40 feet by 40 feet with seating for 50 people.

"We used to have a diesel tank, but we didn't sell enough, and it was by the bar we built," Ziegler said. "So, we took it out and expanded the bar, and we actually make more money with the pool table there."

Ziggy's enjoys being the only convenience store/gas station for the last eight miles of the island.

Reinventing Foodservice

Ziegler and Hilkes eventually upgraded the kitchen area of Ziggy's to serve a wider variety of menu items, including breakfast, lunch, a deli offering and dinner items. For breakfast, customers can choose from a variety of sandwich options, banana fritters, johnnycakes and more.

The busiest time for the store's kitchen is lunch, when it offers a blend of West Indian food typical to the island such as a Roti, an Indian dish similar to a burrito, along with selections that people from the states are more familiar with. In 2012, the store won Best Roti on St. Croix, and it was voted Best West Indian Cuisine in 2013.

"Our cubano sandwich is one of our most popular items, and we also offer baked chicken with rice and beans, and mac and cheese," Ziegler said. "We were No. 8 on Trip Advisor for the best restaurants on the island."

Dinner is also served and on the island, people usually eat around 4 p.m. or 5 p.m., he noted. The store has a cooler stocked with take-home meals, which started after a suggestion from a customer.

"Every day, we make rice and beans, chicken and mac and cheese for the kitchen, and what we don't sell by 5 p.m. we put into a cooler for people to purchase and take home with them. We usually sell out every night," Ziegler said.

Additionally, Ziggy's brought in a chef who worked in high-end restaurants and began to offer monthly dinners and wine tastings out on the deck. The tables are draped in white tablecloths with candlelight, and each dinner has a theme.

"We call it 'Dinner on the Deck,' and it includes a three- or four-course meal and wine tasting," Ziegler explained. "One dinner theme was New York and we offered New York City street fair food, but upgraded it. We had a corn dog with a truffle dipping sauce, for example, and we pair the meal with whatever wine is appropriate. If it rains, we move the tables under the gas canopy."

The monthly dinners have gone so well that Ziegler is considering another expansion to the current menu and bringing in a chef full-time. They also rent out the deck for birthday, retirement and other parties, and offer catering services.

Extra Amenities

Outside of the c-store, bar and restaurant business, Ziggy's Island Market partners with other businesses on the island to offer complementary services to its customers, including car washes and oil changes.

"The population is not big enough to have a full-time car wash or oil change service, so we have a guy called the 'Oil Genie' who runs a mobile oil change unit once a month," Ziegler said. "Instead of having to drive to 16 houses, he can do all the oil changes here in eight hours, and when somebody pulls in for their appointment, they sit and have breakfast here and buy things from us."

Ziggy's has someone wash cars on Sundays as well, and even opens up the store to non-competing businesses in the community. "On Saturday, we might have someone who sells jewelry or baked bread and pastries," he noted. "We give them the venue and don't charge a commission because it brings us business."

Also a boost to business is the store's recycling program for plastic bags. For every 25 bags a customer brings in, they receive $1 off their purchase. A couple of months ago, the island added its first recycling facility so now the store is adding cans to the recycling program.

"We celebrated our fourth year anniversary, and I have never been bored in this business," Ziegler said, admitting that he is usually ready for his next challenge at this point. "This is someplace I can't get bored."
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Author:Mastroberte, Tammy
Publication:Convenience Store News for the Single Store Owner
Geographic Code:1U3IN
Date:Dec 1, 2013
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