This is tangentially a car question.
Does anyone out there have an opinion (backed by knowledge, preferably) about opening/purchasing a gas/service station? I know mechanics and service station owners don’t always stand in as high regard as Tom and Ray. But it seems like a decent business that won’t necessarily make an honest guy rich, but can provide a decent income with reasonable security.
Related to this… what about the next wave in fuel stations (i.e. charging stations etc.)
Would love some thoughts on the topic.
This is tangentially a car question.
In my area in the midwest, there are very few individually owned service stations. Most of the service stations that are owned and not leased have pulled the gasoline pumps. Many of the service stations that were leased have become 7-11 type operations with no repair facilities. Soe of the others have become quick lube type places. Still other comany owned stations have been sold, the buidings demolished and something else is on the site. The oil companies seem to want to sell their products through chains that also sell small grocery items and do no automotive repair.
I think about 30 years ago, the oil companies began squeezing out the owners and the people who leased service stations from them. One operator who leased a service station and was a terrific tune-up specialist at the time told me that the oil companies pushed for a big cut of his profits on the repair business. He built his own repair shop. Most of the old service stations that were owned by the oil companies have either been torn down or remodeled into the 7-11 type operation.
Back in the 1960’s, one U.S. senator complained that the oil companies wanted to control everything from the well-head to the pump. I guess the oil companies have achieved their goal. Independent owners have been squeezed out. I don’t think it is a business where, at least in the midwest, one can make a living.
You can’t make a living selling gas. The gas station’s mark up on fuel is usually pretty minuscule and so unless you’re selling huge volumes like in a truck stop, it’s not even enough to cover the overhead. On most corner gas station type places, the gas is only there to get people in the door to buy drinks and snacks. Or, once upon a time, it was the same thing with service stations, where they were hoping you’d realize you need an oil change or tune up while you were filling up. But newer cars are so much lower maintenance that it doesn’t really work like that any more-- chances are if there’s still a service-station in your town it’s been around forever.
So these days there’s no real reason to have gas and mechanics in the same location, so the question is really more about running a mechanic shop. You can make a reasonable living at it if you have good business sense and a good feel for how this particular industry works. I’d sort of say it’s a “if you have to ask…” type situation though, because there are a lot of intricacies in the way it works and I would say some sort of prior experience with the industry, preferably in the same community, is a must.
The days of the private gas station owners are over. You can no longer make a decent living selling gas. You will make more selling soft drinks and snacks. I owned a Sunoco station for a year and just about went broke. It was my father’s station and I tried to keep it open. Gas station owners pay just like regular folks when the gas prices go up. The station was sold to make a car lot and now that’s out of business.
There was an ABC TV special on the other night which discussed why so many gas stations have “convenience stores” with them. As missleman noted, the reason is due to gas prices being so competitive that a station can no longer make a profit on gas alone. It must have the indoor store to supplement the sales to make the store profitable.
If you’re thinking the ‘6 pumps and 2 service bays’ kind of a gas station, then I agree with all the others, that is no longe a viable business model in most areas, what with the franchised car repair places, oil change, etc, and the big gas retailers. If you’re wanting a 7-11 type of franchise, that’s something else. I read recently that they make more money on the bottled water than they do the gas…
If you try a true “independent” operation, you OWN the entire facility, it’s almost impossible. Insuring the storage and pumping system against leaks is VERY expensive. Then, you need a fuel supply contract from SOMEONE. Good Luck. They will retail product down the street from an outlet they own cheaper than they will wholesale it to you…Gasoline is sold with a huge price sign out on the street. That’s not a business you want to get into…Now a decent repair shop that specializes in a limited field or make of car can be a VERY good business…
LEASING a facility means you are working for someone else…If you are a success and start making money, they will jack up your rent and at some point force you to move…
Yeah. That’s sort of what I figured, you have to sell something besides gas. The convenience store model seems to be the money maker. From what I’m looking at in stats (from the guys trying to sell) you make more per month on the convenience store than on the fuel.
I like the idea of a specialized service shop. Maybe since I live in a major city even focusing on “urban transport” scooters, small cars, (heck, maybe even bicycles). The question is: is it even worth it to sell a little gas just as a separate venture. It sounds like maybe the best way to do that is to go totally independent. And considering what Caddyman said maybe the best way to do that is not to do it al all.
Thanks for the advice, all. Would love to hear anyone else’s thoughts.
My grandfather owned two full service gas stations. He made enough to make a nice home for his family and put my mother through college. He also worked himself to death at an early age. I think you would be better off owning a gas station/convenience store rather than a full service station with repair service.
What a great picture!
Notice the “Auto Wash and Wax” service, along with the S&H Green Stamps, and the three digit phone numbers. It looks like the gas pumps had the glass tube/bottle on the top of them so you could see the gas go through it before it went into your car.
There are only two pumps at the island. I assume one is regular and the other is high-test (or ethyl as some called it).
My two uncles owned a gas station/garage in Stratford, Connecticut - back in the 50s & 60s. They made a good living.
A specialized shop sounds neat - do you have specialized experience? Might you work for a specialized shop, get experience? This is a tough business to start out cold in.
My neighbor, a local businessman sells gas (contracted out to an area distributor) at his now “variety store” by one; eliminating human intervention and automating everything and two; selling diesel and 87 octane gas only. I’m sure it’s common practice elsewhere, but around here, he seems to have a distinct pricing overhead advantage over many competitors who don’t. He leases space to Subway and Dunkin Donuts within the store as a draw.
That’s what this previous local gas/service station has turned into…it makes him a lot more money than it used to by feeding drivers instead of servicing cars.
Back in the heyday, you COULD make a good living as the leasing oil company would leave you alone and they kept the rent reasonable…But when they decided to divorce themselves from auto-repair, the handwriting was on the wall.
The most PROFITABLE aspect of my business was doing state inspections and emissions tests. When I concentrated on these services, I made more money…In states with no inspections, there are no traditional service stations, just big company-owned pumpers. A windshield shop should also do well in the right location. You must be near a warehouse supplier…
We lived in a college town of less than 5000 people until 1947, when we moved near a city of about 60,000. At any rate, my Dad had his car serviced and repaired at a Shell station at the end of the street where we lived in the small town. My Dad claimed that the proprietor made over $10,000 a year in those days. That would equate to a salary of 80-100,000 today. Several years ago we traveled back to the town and I drove down the street where we lived when I was five. The Shell station had been replaced by a more modern Shell service station, but the newer station was abandoned and looked like it had been out of business for a long time.
Gasoline marketing is a cut-throat business with refiners and suppliers, jobbers and distributors all making back-stage pricing deals. As a one station operation, you are at their mercy and making money on fuel is next to impossible.
Valero and Hess will street price at cost to maintain high volume (if they have to) just to support the refineries they own. The refinery is where they book their profits, not the retail stations. They will take profits if they can get them, but will cut price to the bone to maintain volume. If you DARE mess with them with your price sign, they will crush you…
When I look at the high definition copy of that image, I don’t think it had the glass fuel pumps. My favorite part of the ad is the truck my grandfather used for delivering diesel fuel to farms.
The two pumps were for regular and high-test, but strangely, they both came out of the same tanker when they delivered the gas to the stations.
Those tankers had multiple tanks, so it (might) still have been two types of gas…or not…
When I was growing up, we lived three miles outside a city of about 60,000. At one intersection on the way to town was a gas station that sold grocery items, but did no automotive repair. We did a lot of business here. The proprietor owned the station and had his family living quarters at the back of the building. The man was a veteran of WW II and bought the business when he returned from service in 1946. He switched gasoline distributors and brands three times because of the terrible treatment he was given by the different oil companies. He started as a Gulf dealer, switched to Shell and ultimately went to Standard. One oil company forgot to tell him to raise the price and he lost a panny on every gallon he pumped. The second time it happened, he told the company to come get its pumps and he switched to another company. I remember going up to his business in 1964 to get some laundry detergent and he told me that the discount store sold the detergent for less than he had to pay his wholsesaler. The city expanded its boundaries and his business was zoned so that he couldn’t expand the operation, nor could he sell out to a company that wanted to modify the business. His request for a variance was turned down by the city council. My mother called a city councilman she knew and embarrassed him with the fact that here was a man who served his country, had the location before the city limits were moved, and was then having his business limited. The owner finally, in 1965, did get a variance and he sold the property to Marathon oil.
Marathon put up a new service station and the person that leased it had a good business. He had three other mechanics and two tow trucks. About 2001, Marathon canceled his lease, tore down the building and a franchised convenience store was opened up that sells Marathon gasoline and grocery items. The business reverted back to what it had been before 1965, except that it is not independently run.
IMHO, if you are going to run your own business, run a business that doesn’t involve the oil companies. In my area, the independent service station operators that stayed in business bought the property, had the pumps pulled,and do strictly auto repair. Gasoline is sold at convenience stores.