Empire Gas Builds Domain in Puerto Rico

(This article was slated to be published in BPN magazine prior to Hurricane Maria. Our thoughts and prayers continue to be with the people at Empire Gas Company, and all victims affected by the recent hurricanes. For a list of relief organizations providing assistance to hurricane victims, along with their ratings, visit CharityNavigator.org. Puerto Rico is in desperate need, please consider making a donation.)

While it is uncertain whether Puerto Rico will ever become the 51st state of the union, one thing is certain related to the propane world — after 50 years in business Empire Gas has certainly staked out an empire on the Isle of Enchantment. Started in 1967 by Ramon Gonzalez Cordero and Ketty Simounet with $10,000 to invest, the company was named Empire Gas because Gonzalez was so confident his venture would become an empire. Today, the company serves nearly 75% of the propane market in Puerto Rico.

Delivering more than 70 million retail and wholesale gallons a year to residents and industrial customers, all four of Gonzalez’ grown children work for the business and there are now some third-generation family employees as well. The 400-plus full-time employees oversee delivery to customers in Puerto Rico as well as some surrounding islands. With 52 plants on the main island, the company has built an infrastructure of pipelines for delivering propane in the city of San Juan where natural gas is not a reliable energy source.

With a tropical climate in the Caribbean, propane is not used as much for home heating in the U.S. territory as it is for heating water for various purposes. Restaurants are large users of propane and Empire Gas has nearly 90% of them as customers. The larger franchises on the island, such as Burger King and McDonalds, all rely on Empire Gas. And there are plenty more easily recognizable franchise restaurant customers, among them Popeyes, Longhorn Steakhouse, Sizzler, Papa John’s, Wendy’s, Chili’s, Olive Garden, Macaroni Grill, and PF Chang’s. In most cases when several restaurants are situated close together, such as in a food court, they will all rely on propane from the same central tank. Empire Gas handles all aspects of design, permits, and installation of the distribution system.

Earlier, after Gonzalez graduated from college, he joined Tropigas as a sales representative. A large part of his job in his 11 years with the firm was converting customers from kerosene to propane, which had many advantages for cooking because of its clean, efficient benefits. Much of the business included providing 100-lb cylinders. When he left Tropigas to start Empire Gas, his former employer had a 75% market share. He began the process of winning over customers to his enterprise and steadily over the years moved the needle to 75% for Empire Gas.

“The key to getting, and keeping, new customers was service,” said his son, Xavier Gonzalez Simounet, who serves as sales and marketing manager for the company. Simounet said service was definitely king in the domestic market, far outweighing price as a factor. In the commercial market, it was a combination of service, price, and technical support that converted customers. “We only charge for parts, not for labor,” he said. 

Growth for Empire Gas was slow but steady in the early days. Ramon Gonzalez did not like to take out loans so he built as he earned. “He didn’t like to borrow money,” Simounet added. “Most of the money he made was reinvested into the company. He was never one to buy expensive things. He just preferred to put the money he made back into the company.”

Major growth occurred in the late 1980s and early 1990s as Puerto Rico’s infrastructure expanded rapidly. Sales almost tripled during this time. Furthermore, a retail operation on the island owned by Enron became available when it went into bankruptcy in 1998 and 1999. Through the purchase of assets, Empire Gas added the Procaribe terminal and 20 MMgal. of storage capacity. 

Growth potential continues with opportunities in propane autogas and cogeneration. “We have converted 600 vehicles already from gasoline to propane,” Simounet said. “We work with a couple of shops that install the PRINS conversion kits. While I think people like this program as a way to help the environment, overall they are most interested in the savings they can take advantage of. Usually they can save at least 30%.”

As Empire Gas celebrates its 50th year in business, much has changed since the days Ramon Gonzalez started his firm as a middleman selling propane in 100-lb cylinders. The company has grown to be a business with a 75% market share, providing more than 70 million gallons of propane a year. At the same time, the enterprise is severely limiting demand for kerosene and successfully competing head-on with natural gas and, more recently, motor gasoline. 

—Pat Thornton