The dismal situation for Ukraine’s gasoline retailers has seen as least one company find inspiration to branch out – launching a chain of cafes with roadside menus.
WOG is Ukraine’s second-largest gasoline retailer and based in Lutsk with nearly 500 gas stations across the country.
Now it wants to take the experience of highway fast food cafes to the hearts of Ukrainian cities. The company’s plan is to open 30 coffee shops in the largest cities next year and up to 300 outlets across the country by 2019.
Part of the reason for the company’s decision is the bad shape that the industry is in.
Gasoline retailers have seen their sales falling throughout 2015, with sales of fuel at gas stations having fallen by nearly 20 percent this year, according to the state statistics office. The drop came after the trade volumes declined by one-fourth in 2014.
The reason for that, experts said, is an economic crisis and expensive fuel, which in Ukraine is not getting any cheaper despite falling oil prices. The price increased by 15 percent this year after growing by 60 percent in 2014. As a result, traveling by car has become a luxury for many Ukrainians. As dropping sales are eating into the profit margin of Ukrainian gas operators, some of them are looking for new markets.
The first WOG cafe in downtown Kyiv, opened in late November, is reminiscent of its counterparts from gas stations. It offers the same simple menu at the same prices and fast service in a cozy atmosphere. The menu includes a variety of snacks like hot dogs, burgers, salads, desserts and coffee, for in-house customers and to go.
“We want people to associate WOG with not only a network of gas stations but also with a cafe chain,” Iulia Frearson, the director of the WOG cafe in Kyiv, told the Kyiv Post. “We have seen so many clients who are willing not only to fill up their car tanks but also to try our menu, so we decided to branch out.”
Frearson said that WOG will strive to match coffee shops like U.S.-based Starbucks or European Union-based Costa Cofee or Caffè Nero. At the same time, she said that those international companies are unlikely to develop business in Ukraine in the light of the current financial and political factors, as well as tax policies. So WOG Café is seizing the opportunity to fill the niche of a nationwide coffee shop.
“It is too expensive to open Starbucks here and make coffee for 3 dollars. In Ukrainian currency, one cup would cost Hr 73. That makes the coffee unaffordable for locals,” Frearson said. “Our coffee costs less than a dollar.”
The event is unique for Ukrainian business, as the gas stations operator has never launched a separate network of cafes before. The next WOG Cafe is expected to be opened in Lviv in a few months.
Kyiv Post writer Olena Savchuk can be reached at [email protected]
