Comment by zahlman
> and they typically make almost nothing on gas, most of their margin is in the c-store.
It's hard for me to imagine gas station convenience stores doing enough volume for this to make any business sense.
> and they typically make almost nothing on gas, most of their margin is in the c-store.
It's hard for me to imagine gas station convenience stores doing enough volume for this to make any business sense.
Movie theaters have a similar model. The movie gets you in the door, but it’s very low margin. They make almost all their profit on the concessions.
While I can count on one hand the number of times I walk into the store at a gas station in a given year, I know others who buy things on a daily basis, to the point that they’re on a first name basis with everyone there and the employees start asking questions if a few days go buy without a visit.
Pretty well known, and documented. You can google it, or do the math yourself. Typical margins are around 1-2% on fuel sales. You can check this by looking up the wholesale price of gas (search for 'gasoline rack price', that tells you what it costs at the distribution center), then add in taxes, and you will find that most stations are within a few cents of cost. Don't forget that gas pumps cost $20k per, and all of the fixed costs like tanks, testing, calibration, inspections, etc.
The business model for a typical gas station is to bring people in with competitively priced gas, since people are incredibly price sensitive to gas, and then make money with high margin c-store items. Most of the things in a c-store have triple digit margins. That's why you'll see plenty of c-stores without gas stations, but its pretty rare to see a gas station that doesn't have a business attached.