Gas Station operators walking away from their businesses - check this out!

[Kadie]

Service stations feel the squeeze
Some operators walk away from their business, returning it to the company
David R. Baker, Chronicle Staff Writer

Sunday, November 20, 2005



High gasoline prices don't necessarily make service station operators rich. Ask Ricardo Tan.

Last year, not even record prices at the pump could save his Berkeley gas station business.

The problem wasn't his location. His Shell station bordered University Avenue, thick with cars heading to and from the nearby freeway.

But oil giant Shell, which owns the facility, was drastically raising Tan's rent.

The $2,000 per month he paid in the late 1990s had gone to $7,900 in 2001, then $8,600 the following year, he said. Now, the company wanted $11,710. And that didn't include other monthly fees he was obliged to pay for credit card processing and station maintenance.

Tan decided he couldn't make a profit. He walked away from the station, turning it back over to Shell.

more...
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/11/20/BUG1IFPV1K1.DTL

[qanda]

1. That should be a crime.

[MercutioATC]

9. Not if it's allowed by contract...

...which it almost certainly is.

[proud2BlibKansan]

2. I got ripped off by a car wash last week

and when I went in to the station to get a refund, the owner told me she had owned the station a month and had already spent $4000 to fix that car wash. Doesn't sound like a profitable business to me.

[davsand]

3. Most gas station owners are small business guys.

They really have been hurt by the gas prices like the rest of us have been. Most of those guys are dependent on the quickie mart side of the operations to make any real profits--especially after gas prices went up and people quit using as much gas.

They really don't make a lot on the gas they sell--and in some cases the gas is literally sold at whatever price they paid for it with any profit coming from food purchases or mechanic work (in places that still offer it, that is.)

You'd be amazed at what you learn by chatting with the local gas station owner...


Laura

[Sinistrous]

4. This happened to an Exxon station owner here a few years back:

The owner was paying Exxon more for gas than the price nearby stations were selling it.

Sinistrous

[Hugin]

5. Dayum!

No, there's no way he could've survived with overhead like that.

Looks like the front office is even gouging their own.

[linazelle]

6. What are they doing, setting the stage for Walmart gas? nt

[sallyseven]

7. You got that right

[jmowreader]

8. It wouldn't surprise me

There are two Wal-Mart gas stations in Cumberland County. They're always three or four cents per gallon below everyone else.

The only thing I can figure out is that they're really raking it in on cigarette and soda sales, because they're probably losing a penny per gallon on their fuel. And "raking it in" is relative--they have this huge sign bragging about having the lowest cigarette prices in town.

Also, gas makes no sense as a loss-leader, an item that you lose money on to draw people into the store for other, more profitable items. The gas station is far enough away from the rest of the store, you have to make a conscious decision to go into the main store. Pork and Beans as a loss leader is a different story: you buy the beans, and as long as you're there you'll get fifteen or twenty other things.

[Left Is Write]

10. Gas as a loss-leader made sense before the advent of pay-at-the-pump.

If a customer had to go inside to pay, chances are very good that he would pick up a few other things while there.

Now? I pay at the pump only and never go inside.