Normand has been in business for seven years and said his stores have built a good reputation as places to eat hot meals, making his customers want to come back. “So mom-and-pop stores have to be different from corporate stores,” he said. “In the gas station business, you have to be in the hot feed business.” And station owners are affected by inflation and product shortages, as are small businesses around the world. Wholesale prices for coffee, toilet paper and beef jerky have skyrocketed in recent months, and labor prices are also rising. When we did a comparative analysis of the gross profit margin of U.S. gas stations between 2020 and 2022, we found cases where margins were so low that retailers were selling at a loss. COVID-19 lockdowns boosted demand in 2020 and again in the second half of 2021 as COVID-19 variants raised concerns about fuel demand. While the environmental history of the station site is crucial, considering zoning and future zoning impacts as part of your due diligence is also crucial. To avoid negative consequences, follow your duty of care. Working with specialized and experienced gas station brokers is a very effective way to perform your due diligence. A gas station is not like most businesses.
Special insurance, permits and taxes are required. The insurance covers you for fires and explosions, as well as other liabilities that most companies don`t have. But when all else fails, gas stations always have a secret financial weapon in their pockets: those fascinating rotating hot dog machines. It is difficult to justify considering that electric vehicles currently account for <1% of cars on the road. But the industry is growing rapidly: 4 in 10 consumers say they would consider buying an electric vehicle for their next car, and autonomous electric vehicle stations are popping up across the country to serve them. It is important to compare the advantages and disadvantages of independent and franchised stations when buying a gas station. The main advantage of a franchised station is the brand awareness, brands, retail designs and canopy associated with the national brand. The main advantage of owning an independent gas station is the savings on franchise fees and independence in managing your gas station. A common misconception about gas stations is that they are all owned by large companies that can suffer significant losses. You can see BP, Shell or mobile signage, but in reality, half of them are small businesses called "independent traders" and they are at the mercy of the market. These retailers rely on extremely thin daily profit margins.
After all, it is not in the interest of a fuel dealer to maintain high sign prices. Consumers have plenty of options when it`s time to refuel and therefore have little loyalty. The typical U.S. fuel dealer has at least one competitive gas station just 0.016 miles away and at least 1.5 stations within a half-mile radius. In addition to fierce competition, gas stations also need to get consumers to show up at the pump. Rising data shows that gas stations sell four percent less gasoline than the previous year. Assess whether an “environmental emergency clause” is included in the gas station purchase agreement. In addition, conduct a Phase 1 environmental site assessment to determine the risk of contamination, environmental history and potential hazards of the property in question. In reality, most owners are individual operators who own only one station.
Let`s say you buy a gallon of gas at your local station for $4.09 (the national average, as of April 13, 2022). Some forces are working against this business model. Gas stations are usually franchises, so they already know your brand. You should always promote YOUR business. You should make a list of the places you want to promote and what budget you have. Ads for Shell, Arco or 76 are intended to reach a national audience. Keep it local. In contrast, these coin-operated air machines, which you`ll find at most stations, can make a profit of $300 to $500 per month, even after paying the companies that rent them.
Convenience stores also have some of the highest crime rates of any business in America, with average annual losses due to robberies of more than $761 per location. That`s well below the 7.7 percent average across all industries — and ranks among other notoriously low-margin businesses like grocery stores (2.5 percent) and car dealerships (3.2 percent). You need to know if there may still be an outstanding environmental dispute in which the current owner was involved. In California, a gas station salesperson is required to disclose all pending litigation. Ask the seller directly. You can also ask your lawyer to check if the gas station seller is or has been involved in a gas station-related lawsuit. Most gas stations fall into the “franchise” or “independent” category. Franchised broadcasters operate under a franchise agreement with national suppliers such as Exxon or BP.
Independent broadcasters do not receive support from national providers. Their fuel source comes from a variety of regional suppliers. A misconception is that gas station owners love it when gas prices go up. Fortunately, most gas stations don`t care much about gas gains. When buying a gas station, carefully evaluate the following for each potential gas station you want to buy: 65 Checklist for Restaurant Buyers You Should Review Before Buying a Restaurant Owning a restaurant is the epitome of a small business. Restaurants are life. With the ever-increasing U.S. demand for fuel, buying a gas station that is a good investment in small businesses is a good investment. Our economy literally runs entirely on gasoline. Trucks are needed to transport goods and people have to drive to work. But the stations have a bigger concern: the long-term future of gas.
In 2022, most retailers aren`t greedy – they`re trying to keep their business going. When it comes to alleviating inflationary pressures in the fuel sector, artificially lowering the price of retailers is not the lever that benefits the most. Last year, gas stations in the U.S. sold ~135 billion gallons of fuel, enough to fill 204,000 Olympic-sized swimming pools. When buying a gas station, there are many factors to consider. These 5 factors are essential for effective due diligence. You want to make sure you`re buying a profitable and lucrative gas station, and avoid buying an environmental challenge that can eat up your profit margins. But extracting oil from the ground is only the first step and only a component of the cost. Crude oil is about half the cost of a gallon of gasoline. If the price of oil is $100 per barrel (or 42 gallons), crude is about $2.40 per gallon. The oil is then refined into gasoline and transported to the gas station, increasing costs.
Then comes the government. The price drivers pay at the pump averages about 60 cents per gallon for federal and state taxes. According to a study by the National Association of Convenience Stores, 44% of gas station customers go there. And among them, 1 in 3 ends with some kind of treat. Nevertheless, gas stations have been in decline for several decades. Most modern pumps have card readers, eliminating the need to enter to pay. The average time a customer spends at a gas station is now only 2 to 3 minutes. Right now, fuel traders are simply trying to maintain their business, not grow it. Asking fuel merchants to artificially lower the price of signs is asking them to sacrifice their business. Get The Hustle`s 5-minute weekday summary that keeps you up to date on events in technology, business, and the internet. Things. California Gas Station Brokers – Dispensing Expertise & Pumping Opportunities is our Mission Peak Brokers specialty specializing in different types of businesses.
One of us. Our country has more than 120,000 gas stations. There is a convenience store in over 80% of these stations. Since gas stations are an essential business, it is obvious that they are a good investment for the small business owner. One of the most important aspects to consider when buying a station is the possibility of contamination. Any contamination, especially if it occurs after the purchase of the station, requires costly corrective measures. This could result in the closure of the station and its future viability severely reduced. If you have a supermarket, you could lose stuff if you don`t keep things in stock. A convenience store must live up to its name as a convenience store. When grocery stores are closed, a customer wants to find a product they want, not an empty shelf. Many stations have made the expensive decision to install EV charging units, which can cost $100,000 per pop.
Adding advertising to your budget is worth more than the money you`re likely to make. Although an advertisement for a gas station on TV or in newspapers is usually rare, good signage on highways or in town will help you stay nearby. Especially if you have a supermarket, prominent signs indicating this will increase your activity with locals and tourists.