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Not sure how much to trust an article where most key data comes from National Assoc of Convenience Stores. The data at http://blog.opisnet.com/retail-gasoline-p

Not sure how much to trust an article where most key data comes from National Assoc of Convenience Stores. The data at http://blog.opisnet.com/retail-gasoline-price-margins?hs_amp=true http://blog.opisnet.com/retail-gasoline-price-margins?hs_amp... looks more reliable and data-driven and discusses gross margins of 10 to 40+ cents per gal.

zdragnar 5y ago
5-10 cents max was accurate about 15 years ago, though I lost touch with those in the know since then. 40 cents on a gallon of gas sounds pretty exceptional- perhaps a geographic specific thing.
refurb 5y ago
It’s been a long time since I was close to the numbers but there are a lot of variables. Independent stations have much higher margins - you pay heavily for branding. When I did the books margins were 0.075/gal for regular and 0.013/gal (edit: should be 0.13/gal) for premium. I could see those as double for an independent station. This should not be surprising at all. Consumers are incredibly price sensitive and will drive 19 min to save $0.05/gal (save $0.75 and burn $0.60 of gas in the process). The supply chain for gas captures margins, not the gas stations. I would get calls from corporate for $0.03/gal adjustments several times a day if gas prices were volatile. It all came down to in store sales where mark ups were 50-100%. Youd be surprised how many people paid $5 for a bottle of mustard they could buy for $2 at Safeway. Cigarettes were the other huge sellers. On a holiday weekend we’d sell 12,000 gal of gas on a Friday, make $800 on the gas and $30,000 (after COGS) on in store sales.
- jacobolus 5y ago
  > Consumers are incredibly price sensitive and will drive 19 min to save $0.05/gal My grandpa would drive all around town to save a few cents per gallon. It always seemed insanely wasteful to me.
  - steveBK123 5y ago
    My dad did the same, literally drove a couple towns over to a neighborhood he wouldn't go at night.. for gas.
- listenallyall 5y ago
  I agree that c-store sales are huge. But I take issue with your numbers... are you sure premium gas has 80% lower markup than regular? The people who buy premium gas tend to be wealthier and less price sensitive, further, premium gas is far less likely to posted on the sign. The difference between regular and premium used to be 20 to 30 cents in my experience, now usually 40-50 cent difference. I also question whether big brands have lower margins. People seem to gravitate to the Wawa and RaceTrak and Sheetz and Love's, often due to cleanliness as much as the store, and they usually appear to price their gas a few cents above no-name competitors and still be much busier.
  - refurb 5y ago
    80% lower? My numbers are about ~90% higher? (I’m dumb! I put an extra zero). Typically premium was sold at a 10% premium so percent margin was maybe 70-80% higher? But I also acknowledge that gasoline sales are very location dependent. Where I was the major brands took most of the sales. But again, you’d sometimes find an independent in a prime location who must have been making $500k per year. I did books at a very busy station where the owner made ~$200k in today’s dollars Major disclaimer that what I observed may not apply to other markets.
    - listenallyall 5y ago
      > in a prime location I have no doubt that owning a gas station can be hugely profitable. Those independents making 500k made more money because they could get away with charging more for gas, being in a great location. Not because of lower costs. And also because, despite anecdotes, most people are not super price sensitive.
      - refurb 5y ago
        Costs are lower for independents though. No franchise fee, you can source your own goods (franchisees often have to buy from one supplier). The franchiser can squeeze a lot of margin from the station. Of course being independent is much harder, but also potentially more profitable.
1123581321 5y ago
That article says that typical stations make perhaps $15k/year on fuel after expenses and occasionally have months, when fuel prices are dropping and customers aren’t as cutthroat, where they make another $10-15k. So perhaps $20k/year and that’s if their operations are scaling well. That’s the same thing the c-store industry is talking about.
- listenallyall 5y ago
  It estimates 11,400 per month (not year) in gross profit. Sure there are additional expenses -- credit card fees, utilities, rent, labor -- but those would seem to be attributable more towards the convenience store part of the business.
  - bell-cot 5y ago
    I've never owned/managed a gas station - but I'm thinking that just selling gas carries some serious overhead. Santa Claus did not bring, nor install, the large underground storage tanks, pumps, & related infrastructure. The local property tax authorities probably know how much that's all worth. Then there's the maintenance, inspection fees, insurance, etc. on it...
    - listenallyall 5y ago
      > large underground storage tanks, pumps, & related infrastructure. That's CapEx. Plus, somebody built the store, too. How about labor? When was the last time you saw an employee OUTSIDE at a gas station, not inside the convenience store? I never said the gas station part has no costs, just that the store likely has more, and when a article from "The Hustle" attributes ALL OpEx to the gas, it's the readers being hustled.
  - 1123581321 5y ago
    I read it. It estimates $10k of operating expenses right after $11.4k gross margin on fuel. Why would you think I hadn’t factored that whole paragraph into my $1500/mo? To your point in the other thread, you’re right that some of typical operating expenses happen because of the convenience store. It’s possible to run pumps with no store partially unmanned and make money (you see this at some rest stop gas stations on interstates, for example, or some grocery store lots.) However, those are blessed due to unusual location and not attainable for most owners, so they need to run a more complex and attractive operation.
S_A_P 5y ago
Some gas stations where I live operate on the Location Location Location business model. Being the only gas station in the vicinity that also happens to be in between a freeway exit and entrance. You can find that their gas is 25 cents per gallon higher than a station ½ mile away. When I find myself in that situation I usually buy 2 gallons and leave for a cheaper station. They likely do ok on gasoline profits. Also seems like here in Texas gas convenience stores are doubling as a pharmacy of sorts for ED CBD and vapes.

zdragnar 5y ago

5-10 cents max was accurate about 15 years ago, though I lost touch with those in the know since then. 40 cents on a gallon of gas sounds pretty exceptional- perhaps a geographic specific thing.

refurb 5y ago

It’s been a long time since I was close to the numbers but there are a lot of variables. Independent stations have much higher margins - you pay heavily for branding. When I did the books margins were 0.075/gal for regular and 0.013/gal (edit: should be 0.13/gal) for premium. I could see those as double for an independent station. This should not be surprising at all. Consumers are incredibly price sensitive and will drive 19 min to save $0.05/gal (save $0.75 and burn $0.60 of gas in the process). The supply chain for gas captures margins, not the gas stations. I would get calls from corporate for $0.03/gal adjustments several times a day if gas prices were volatile. It all came down to in store sales where mark ups were 50-100%. Youd be surprised how many people paid $5 for a bottle of mustard they could buy for $2 at Safeway. Cigarettes were the other huge sellers. On a holiday weekend we’d sell 12,000 gal of gas on a Friday, make $800 on the gas and $30,000 (after COGS) on in store sales.

jacobolus 5y ago
> Consumers are incredibly price sensitive and will drive 19 min to save $0.05/gal My grandpa would drive all around town to save a few cents per gallon. It always seemed insanely wasteful to me.
- steveBK123 5y ago
  My dad did the same, literally drove a couple towns over to a neighborhood he wouldn't go at night.. for gas.
listenallyall 5y ago
I agree that c-store sales are huge. But I take issue with your numbers... are you sure premium gas has 80% lower markup than regular? The people who buy premium gas tend to be wealthier and less price sensitive, further, premium gas is far less likely to posted on the sign. The difference between regular and premium used to be 20 to 30 cents in my experience, now usually 40-50 cent difference. I also question whether big brands have lower margins. People seem to gravitate to the Wawa and RaceTrak and Sheetz and Love's, often due to cleanliness as much as the store, and they usually appear to price their gas a few cents above no-name competitors and still be much busier.
- refurb 5y ago
  80% lower? My numbers are about ~90% higher? (I’m dumb! I put an extra zero). Typically premium was sold at a 10% premium so percent margin was maybe 70-80% higher? But I also acknowledge that gasoline sales are very location dependent. Where I was the major brands took most of the sales. But again, you’d sometimes find an independent in a prime location who must have been making $500k per year. I did books at a very busy station where the owner made ~$200k in today’s dollars Major disclaimer that what I observed may not apply to other markets.
  - listenallyall 5y ago
    > in a prime location I have no doubt that owning a gas station can be hugely profitable. Those independents making 500k made more money because they could get away with charging more for gas, being in a great location. Not because of lower costs. And also because, despite anecdotes, most people are not super price sensitive.
    - refurb 5y ago
      Costs are lower for independents though. No franchise fee, you can source your own goods (franchisees often have to buy from one supplier). The franchiser can squeeze a lot of margin from the station. Of course being independent is much harder, but also potentially more profitable.

1123581321 5y ago

That article says that typical stations make perhaps $15k/year on fuel after expenses and occasionally have months, when fuel prices are dropping and customers aren’t as cutthroat, where they make another $10-15k. So perhaps $20k/year and that’s if their operations are scaling well. That’s the same thing the c-store industry is talking about.

listenallyall 5y ago
It estimates 11,400 per month (not year) in gross profit. Sure there are additional expenses -- credit card fees, utilities, rent, labor -- but those would seem to be attributable more towards the convenience store part of the business.
- bell-cot 5y ago
  I've never owned/managed a gas station - but I'm thinking that just selling gas carries some serious overhead. Santa Claus did not bring, nor install, the large underground storage tanks, pumps, & related infrastructure. The local property tax authorities probably know how much that's all worth. Then there's the maintenance, inspection fees, insurance, etc. on it...
  - listenallyall 5y ago
    > large underground storage tanks, pumps, & related infrastructure. That's CapEx. Plus, somebody built the store, too. How about labor? When was the last time you saw an employee OUTSIDE at a gas station, not inside the convenience store? I never said the gas station part has no costs, just that the store likely has more, and when a article from "The Hustle" attributes ALL OpEx to the gas, it's the readers being hustled.
- 1123581321 5y ago
  I read it. It estimates $10k of operating expenses right after $11.4k gross margin on fuel. Why would you think I hadn’t factored that whole paragraph into my $1500/mo? To your point in the other thread, you’re right that some of typical operating expenses happen because of the convenience store. It’s possible to run pumps with no store partially unmanned and make money (you see this at some rest stop gas stations on interstates, for example, or some grocery store lots.) However, those are blessed due to unusual location and not attainable for most owners, so they need to run a more complex and attractive operation.

S_A_P 5y ago

Some gas stations where I live operate on the Location Location Location business model. Being the only gas station in the vicinity that also happens to be in between a freeway exit and entrance. You can find that their gas is 25 cents per gallon higher than a station ½ mile away. When I find myself in that situation I usually buy 2 gallons and leave for a cheaper station. They likely do ok on gasoline profits. Also seems like here in Texas gas convenience stores are doubling as a pharmacy of sorts for ED CBD and vapes.