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TheBuzz Erika Engle |
Shell game causes
stationowner to close
profitable businessWarren Higa is used to closing up shop at Makiki Shell, at the corner of Beretania and Makiki Streets. He's done it for 24 years as the owner of the full-service gas station he purchased from Milo Hull, his boss for the preceding 10 years.
When he closes up on Friday, Halloween, it will be for the last time.
"The rent is going up, which is happening to a lot of service stations ... at my location it's gone up to a point where I can't afford to stay any longer," he said.
The rent was $7,000 three years ago. Shell Oil USA told him this time around it was going up to $19,000 a month.
Higa was willing to pay more rent, but said Shell would not negotiate.
The family that owns the land has raised Shell's rent in the past, but not as much as Shell wanted to raise his, he said.
It is a valuable property and he doesn't blame Shell for wanting more money from it.
Shell will assume operation of the station Higa thinks has been there since the 1940s.
The local Shell company representative could not be reached.
"I've lost, I'm walking away. I think Shell has lost because I think they could have done better compromising a bit and keeping me here. The neighborhood loses too, if the stations all turn into convenience stores. There'll be no place to go to fix a flat tire or for emergency repairs and somebody to help older folks pump their gas. We all lose," said Higa.
In 1979 Higa invested $45,000 to buy the business from Hull. "If you just take inflation into account it should be (worth) $200,000, but we grew the business so it should be worth way more than that."
He walks away, not with money, but with a mutual termination agreement with Shell.
One former service station owner is now a petroleum industry consultant who works with gasoline dealers and consumer groups. Based in Washington State, Tim Hamilton said oil companies are all moving toward convenience stores, raising rents and imposing other expensive conditions on dealers. "We've had a lot of dealers fail."
Increasingly, dealers face three situations.
"A, the dealer is walking out in mid-franchise because, 'I can't pay anymore,' B, they're offered a new franchise with additional rent at the end of the expiring one, or C, they have been nonrenewed, give up the ground lease and are going to vacate the station," Hamilton said.
Dealers in the first two scenarios are being "economically evicted," he said.
Higa doesn't want to sound bitter about the way his business ownership has come to an end, but knows he could have continued to make the company money.
"If you have a repair shop and if you're a good dealer, I think you can make as much money or more as a convenience store. There's so few of us around anymore. You can be busy all the time and the repair business is good."
But convenience stores cost a lot less to staff and operate.
Higa and four of his staff will join Clyde Marugame's Manoa Service Station at 2729 E. Manoa Road, in Manoa Marketplace. Higa helped the remainder of his 20-member staff find other employment.
"It's kind of sad walking away from this and not being able to pass it on. This is a successful business. This is not a business that is losing money."
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Erika Engle is a reporter with the Star-Bulletin. Call 529-4302, fax 529-4750 or write to Erika Engle, Honolulu Star-Bulletin, 500 Ala Moana Blvd., No. 7-210, Honolulu, HI 96813. She can also be reached at: eengle@starbulletin.com
