Japanese consumers will soon be able to gas up and chow down at the same time thanks to a licensing agreement signed Wednesday by Arco and Kyodo Oil of Tokyo.
The pact provides for the opening of more than 500 am/pm mini-markets at Kyodo service stations, starting next spring in Tokyo. Arco already has begun opening am/pm mini-markets in Taiwan under an agreement with another company and is looking to move into other Pacific Rim countries, said Edward G. Reilly, senior vice president of marketing for Arco Products Co., the Los Angeles oil company's marketing and refining arm.
"We think it's a normal extension of our am/pm convenience food store," Reilly said at a news conference at Arco's downtown headquarters.
"I feel that the dealers and gasoline station operators of Kyodo Oil of Japan will be quite pleased to increase their profit margins through this agreement," said Kazushige Nagashima, Kyodo Oil executive vice president, through a translator.
The two companies declined to reveal financial details of the arrangement except to say that a joint venture eventually will be formed in which the companies will be equal partners.
A First for Japan
The agreement marks the first time that a gasoline station and convenience store will be combined in Japan, Reilly said. Both the 7-Eleven and Circle K convenience store chains already operate in Japan but they do not sell gasoline at their stores.
Japan's am/pm mini-markets will stock such Western-style fast food as hot dogs, hamburgers and yogurt as well as Japanese-style "box lunches" containing sushi and other foods.
Kyodo plans to convert some of its 6,400 gas stations to am/pm mini-markets and will also build new outlets. The stores will range in size from 800 to 1,500 square feet. In the United States, where Arco operates about 700 am/pm mini-markets, the stores range from 1,500 to 2,500 square feet.
The agreement was negotiated by Pacific Partners, a Beverly Hills-based investment banking and consulting firm that served as a consultant to both companies. Nagashima said Kyodo has been studying the convenience store market for three years as a way to increase station profits.
Japan's 120 million consumers have demonstrated "a willingness to adapt to new ways of retailing," Reilly said. "They have proven that fast food is as attractive to them as it is in the United States.
"They go crazy for hot dogs and hamburgers in Japan," he said. "They really do."