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I remember talking to a friend who worked for an oil company, who told me that the shops at gas stations actually make 2-3 times more than the revenue generated
by alexholehouse 14y ago
I remember talking to a friend who worked for an oil company, who told me that the shops at gas stations actually make 2-3 times more than the revenue generated from the gas. If you were an oil company which dealt exclusively with the consumer (which of course non of them are) you would in fact be a catering business which sold gas on the side.
- Danieru 14y agoSlight pedantry note: revenue and earnings are not the same thing.
- tdfx 14y agoI think he had them backwards -- I've heard similar stories from others who own gas stations. Gas makes up a substantial portion of their revenue, but the margins are so thin that most of the profit comes from the food and retail services.
- kamaal 14y agoSo basically gas stations are just an excuse to do other business?
- nicholassmith 14y agoPretty much, depending on their location often people pulling in to refuel are a captive market.
- 385668 14y agoAnd why convenience stores in Japan (and other places, I assume, though I haven't seen them) frequently sell the same kinds of merchandise as gas stations do in the US, but most don't sell gas because the margins are so small, the pedestrian market smaller, and real estate so expensive.
- mistercow 14y ago>I remember talking to a friend who worked for an oil company, who told me that the shops at gas stations actually make 2-3 times more than the revenue generated from the gas That is completely impossible. Maybe profit, but not revenue. Even my sedan with a 17 gallon tank costs more to fill up than even a pack-a-day smoker with a lottery addiction and a love of energy drinks is likely to spend at the shop.
- jacquesm 14y agoFormer gas station owner here (don't ask). Profit is correct. Typically a gas station makes 1 or two cents per liter. A 17 gallon tank is approximately 68 liters so that's between $.68 and $1.36 or thereabouts in gross margin for the station. Of that they still have to operate and service the pumps, and deal with periodic mandatory environmental upgrades and inspections. You have to do millions of liters per year to turn a profit on the gas. Gross profits on store goodies are on the order or 20 to 30%. If they're refrigerated then likely it is on the low end, if they are non-perishables then it is on the high end.
- alexholehouse 14y agoSorry - just a typo, meant profit. It was late.