Gray, Gray & Gray Surveys Propane Marketers

Gray, Gray & Gray, of Canton, MA, the energy industry’s leading accounting and business advisory firm, recently released the results of a broad survey of propane retailers in the six-state New England region. This is the first time the firm has surveyed propane dealers specifically. Gray, Gray & Gray has surveyed the region’s Oilheat dealers for the past 25 years.

“Our goal was to create a ‘snapshot’ of the propane industry’s financial and operational best practices, and to provide benchmarks against which propane companies can measure their own performance,” said Jeff Foley, a Partner in Gray, Gray & Gray’s Energy Practice Group. “You can’t manage what you don’t measure, and these numbers provide some key points of comparison for dealers.”

With responses from propane retailers across the entire region, the results paint a picture of an industry that remains primarily privately held, yet is at a transitional point: 44 percent of respondents are considering acquiring a competitor, while 40 percent are thinking about transitioning the business to the next generation.

How can you use these results? Many of the questions zero in on key performance indicators (KPIs), measurements that can help you determine which areas of your business are operating efficiently and which may need more attention. While results will vary for your business, it is helpful to see what the industry averages are, and compare your results accordingly.

For additional information or help in using the propane survey results to measure your own company’s performance, call the Energy Practice Group at Gray, Gray & Gray at (781) 407-0300.

Gray, Gray & Gray Propane Survey Results
In what state does your company primarily do business?
28%     Massachusetts
28%     Maine
16%     Connecticut
16%     New Hampshire
12%     Vermont

In what year was your business founded?
1959 (Avg. 57 years)

Are you a family-owned business?
100%    Yes (Avg. 3 generations)

Total number of employees:
Average of 47

Number of delivery drivers (full-time equivalent):
Average of 9

Number of service technicians (full-time equivalent):
Average of 9

What is the average hourly rate you pay:
Delivery Drivers            $20.50 per hour
Transport Drivers            $22.37 per hour
Dispatchers                $22.53 per hour
Customer Service Representatives    $16.99 per hour
Accounts Payable/Receivable Staff    $20.35 per hour
Service Technicians            $22.72 per hour
Service Manager                $32.22 per hour
General Manager                $38.58 per hour
Operations Manager            $35.80 per hour
Office Manager                $25.22 per hour
Sales Manager                $28.62 per hour

Does your company have a sales team?
52%    Yes
48%     No
If yes, average number of sales people:
Average of 3.15

How do you compensate Sales People?
6%    Straight salary (Avg. amount: $60,000)
93%    Salary plus commission (Avg. total: $68,667)
0%     Commission only
1%    Other: Salary and profit sharing

Are you considering any of the following?
44%    Acquiring another company
1%    Selling your company
40%    Transitioning to the next generation
1%     Conducting a business valuation
1%    Refinancing
1%    Converting to an S Corporation
1%    Retirement

How many propane customers do you have?
Residential    4,087
Commercial    318

What percentage of aboveground customer propane tanks do you own?
Average of 94%

What percentage of underground customer propane tanks do you own?
Average of 41%

Do you charge rental fees for customer propane tanks?
60%    Yes (Avg. $86)
40%    No

Do you charge an installation fee for propane tanks?
64%    Yes (Avg. $109)
36%     No

Do you charge a minimal use fee for propane tanks?
44%    Yes
56%     No
If yes…
90%    Full tank capacity for 12 months
10%    Half tank capacity for 12 months

Do you charge a permit fee for propane tanks?
48%    Yes ($75 to $350; fees differ by town)
52%     No

Do you charge a delivery fee to customers?
8%     Yes (Avg. $5.24)
92%     No

Do you charge a hazardous material fee to customers?
12%     Yes (Aßvg. $4.70)
88%     No

Do you charge other fees for propane tanks?
12%    Yes
88%     No
(Equipment removal, rental fee for generators)

Do you require customers to have a multi-year contract on propane tanks?
For aboveground tanks:
28%     Yes
72%     No
For underground tanks:
36%    Yes
64%     No
If yes, how many years?
Average of 4.05 years

What do you spend annually on the purchase of propane tanks?
Average of $168,105

What percentage of your annual spend on propane tanks is financed?
Average of 13%

How far, on average, do you travel to pick up propane product?
Average of 32.2 miles

How many gallons of propane did you sell during the last heating season?
Residential Propane    1,588,238 gallons
Commercial Propane    823,524 gallons

What was your average targeted margin for propane sales during the last heating season?
Retail/Residential Propane    $1.10 per gallon
Commercial Propane    $.63 per gallon

Do you sell any other fuel or energy products?
84%     Heating Oil
52%     Kerosene
32%     Gasoline
8%     Electricity

Which of the following do you offer to retail customers?
80%     Fixed pricing
44%     Price cap
88%     Budget plan
48%     Service contracts
8%     Free propane for new customers
8%     Free service for new customers
44%     Introductory pricing for new customers
68%     Prompt pay discount
12%     Temperature monitoring
40%     Tank monitoring system
32%     Tank protection plans
84%     Equipment service
80%     Heating system service
76%     Heating system installation
(Other: generators, air conditioning, free site survey)

What do you spend annually on liability insurance?
Average of $144,913

What is your average residential fill (gallons per stop)?
Average of 126 gallons

What your average renewal price you charge for a service contract on heating equipment?
Average of $250

How many paid service contracts do you have?
Average of 410

How many total service calls were made last year?
Average of 4,895

Do you require customers to have a multi-year contract with your company?
4%     Yes (Avg. 3 years)
96%     No

Have you acquired another company in the past three years?
16%     Yes (retained gallons)
8%     Yes (cash at closing)
76%     No

What computer software do you use to run your business?
Industry software:
30%     Blue Cow
17%     Rural Computer (RCC)
13%     Taurus
8%     ADDS
8%     DRM
8%     Total Energy
4%     Cargas
4%     Factor
4%     Suburban
4%     Lynx
Accounting Software:
55%     QuickBooks
14%     Great Plains
8%     Rural Computer (RCC)
4%     Firestorm
4%     Mass 90
4%     Peach Tree
4%     Sage
4%     Taurus
3%     Ignite

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