Thread: Gas stations!?

Does anyone on l4p own/run a gas station? What do you look out for when buyimg a station that is already operating? What does it take to run one?

I have some questions to ask and if anyone can help that would be great!

also curious on this, something I thought about doing recently

You know theres no profit to be made on the actual fuel dont you ? You buy it at x per gallon and sell it for exactly x per gallon. All the cash is made in the food, drinks and other stuff you sell inside!

I worked at one for 5 years so I know what I am talking about here

I really do not know much about this but I know it is very important to look how their lease is setup, i.e will the price of the land lease skyrocket in a couple of years when it needs to be renewed. Also you will be a jobber so your really need to comb through the contracts with the big oil companies, your guy might be selling because he losing money on his contractual obligations, i.e signage cost and what he is allowed to carry within the store. And remember Location Location Location, will a competitor be building across the street from you undercutting your prices. In Texas, Racetrack was known for coming into a location right next to another station and undercutting prices so much that they were losing money but at the same time bankrupting the mom and pop store. Good luck

Originally Posted by thesmileyone

You know theres no profit to be made on the actual fuel dont you ? You buy it at x per gallon and sell it for exactly x per gallon. All the cash is made in the food, drinks and other stuff you sell inside!

I worked at one for 5 years so I know what I am talking about here

This ^^ the margin for gas is nothing........you make all your $$ from groceries, "tobacco" pipes etc. My parents use to own an AM-PM here in Berkeley Cali. It was a money maker but it was stressful at times. Running one is not that hard since everything is now computerized with point of sale systems which manage everything. The key is to have great/loyal employees. One time it was held up at gun point the cashier actually chased down the robber and beat the shit out of him with a baseball bat. He came back to the station and kept working. If you are thinking look at a franchise.

Originally Posted by thesmileyone

You know theres no profit to be made on the actual fuel dont you ? You buy it at x per gallon and sell it for exactly x per gallon. All the cash is made in the food, drinks and other stuff you sell inside!

I worked at one for 5 years so I know what I am talking about here

Really? I hear gas stations put anywhere from a 5-20 cent margin on their fuel. Having a C-store will probably make just as much or maybe more depending on the location.

One thing I dont understand is if a gas station has been around for 10+ years and it sells 90-120k gal at least a month I dont understand why someone would want to sell unless they are retiring or moving. Obviously the industry isn't going anywhere so maybe I am missing something.

Originally Posted by Sheldon07

I really do not know much about this but I know it is very important to look how their lease is setup, i.e will the price of the land lease skyrocket in a couple of years when it needs to be renewed. Also you will be a jobber so your really need to comb through the contracts with the big oil companies, your guy might be selling because he losing money on his contractual obligations, i.e signage cost and what he is allowed to carry within the store. And remember Location Location Location, will a competitor be building across the street from you undercutting your prices. In Texas, Racetrack was known for coming into a location right next to another station and undercutting prices so much that they were losing money but at the same time bankrupting the mom and pop store. Good luck

Thanks for the input! I will make sure to look at all contracts and grab as much info as possible. Also, I can probably contact the city and maybe ask if they have any future remodeling planned for the area just to be on the safe side.

i.e signage cost and what he is allowed to carry within the store.

What do you mean by this? Signage cost meaning paying the price to have a brand name such as 76 or shell?

Originally Posted by rossii

One time it was held up at gun point the cashier actually chased down the robber and beat the shit out of him with a baseball bat. He came back to the station and kept working.

I can't help but laugh at the one, only cause the robber was the one that got beat

the margin on fuel is eaten up by credit card payment fees (appx $ 0.30 + 3% + monthly fee to company). the convenience store/restaurant is where most of the profit comes in.

oh yeah, you also have to figure costs if you have environmental problems with the land. had this happen to a family friend who was making close to $ 1 million/year owning several stations. i think is was the epa that said they had to tear up the land due to hazardous waste issues. ended up costing over $100,000.

Originally Posted by thesmileyone

You know theres no profit to be made on the actual fuel dont you ? You buy it at x per gallon and sell it for exactly x per gallon. All the cash is made in the food, drinks and other stuff you sell inside!

I worked at one for 5 years so I know what I am talking about here

There's plenty of profit in fuel if you know what you're doing and the market becomes volatile as it has been lately. It's all about raising prices quickly and taking profit on the way back down. We've all noticed how it goes up in price quickly but takes forever to drop.

Like any business, it's all about location. I've seen some stations that can barely sell 100,000 gallons to a station that has done 750,000. Multiply that by your average profit per gallon and you can get your answer.

For the markup, stations in Los Angeles are generally about 9-11 cents per gallon. San Francisco actually has the highest per gallon, sometimes in the ballpark of 25 cents. I've seen as high as a 45 cent markup but that was a "oasis" location in the middle of nowhere so cost of delivery was high.

Originally Posted by deuce818

One thing I dont understand is if a gas station has been around for 10+ years and it sells 90-120k gal at least a month I dont understand why someone would want to sell unless they are retiring or moving. Obviously the industry isn't going anywhere so maybe I am missing something.

Some people just get tired of doing what they're doing. They're tired of dealing with all the environmental issues that go along with stations....very highly regulated. I've seen Phase II cleanups run $100,000 to implement.

It's better to have multiple locations as the more gallons you sell, the better the negotiating power you have for purchasing your fuel.

Cheap gas is all about getting people into the C-Store. That is where the real market is.

Financing the purchase of a gas station is a pain and quite impossible for most people especially if they aren't signed with a major brand such as 76, Mobile, or Chevron. ARCO finally adjusted their franchise agreements to allow SBA financing but that was not even an option with them for quite some time.

I know a little about them, mostly from the financial side.

travel centers make the most bank.

24/7, provide gasoline and diesel for truckers= 5 employee's at a time, tons of inventory, and lots of inside sales.

you can make 10-20 cent margins on your gas, but depending on your competitors, you might make as little as 1.

usually, corporate stations will eat a loss if it means pricing their gas lower than one down the street. they are also usually almost always 1 cent less.

credit card fees do eat up a station though, considering that 60-70% of gas sales are made through a credit card.