Comments on: How Gas Stations Make Money

By: Chris

Chris — Tue, 20 Oct 2009 02:16:40 +0000

While it is a bit outdated, when I worked for a Wall Street firm selling securitizations to institutional buyers. One of the deals was the packaging of franchise loans for many of these franchise gas stations. On average, over 60% of revenues was from convenience store purchases.

As for pay at the pump, most likely if you are an Exxon or Chevron franchisee they require you to provide pay as you go. In reality, they would not expect everyone to go inside. In fact, one local station I go to, accepts cash and check only, inside, and its owned by a grocery store and I seldom see many people picking up things on the fly.

Remember, cigarettes, tobacco products and lottery are most of the “impulse” purchases.
Chris´s last blog ..Intellectual Property

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[...] Weakonomics: How Gas Stations Make Money [...]

By: Hank

Hank — Sat, 03 Oct 2009 17:08:35 +0000

Great breakdown, Phil. Very interesting post.
Hank´s last blog ..The Art of Business Is Like Making Sausage, You Don’t Want To Watch Usually

By: Financial Samurai

Financial Samurai — Sat, 03 Oct 2009 03:28:03 +0000

It’s a tough tough business. Gas stations are going broke left and right around me. Volume game sucks.
Financial Samurai´s last blog ..What Renting DVD’s Teaches Us About CD Yield Maximization

By: Ken

Ken — Fri, 02 Oct 2009 23:23:35 +0000

I’m afraid gas stations lose money on me. At the pump, I only buy $1 at a time with my debit card. I do this to meet my monthly reward checking account requirements. I believe gas stations pay quite a bit on interchange fees, and the percentage is high on small purchases.
Ken´s last blog ..High Yield Reward Checking Accounts by State

By: the weakonomist

the weakonomist — Fri, 02 Oct 2009 16:18:07 +0000

BrokeMBA, exactly. If they made nothing on gas then why would they offer pay at the pump? They’re happy to offer since in many circumstances they can make money on the gas. What is a different story is gas station owners’ anger at credit card companies for the transaction fees they must pay, but that’s for another day.

By: Broke MBA

Broke MBA — Fri, 02 Oct 2009 15:04:25 +0000

Interesting. If all the profits are made from gumballs and cigs, the pay at the pump feature must be a real thorn in the side of gas stations. Obviously it’s much easier to avoid these type of impulse purchases when you never see them.
Broke MBA´s last blog ..Net Worth Update – September 2009: $63,562 (+2.7%)

By: Kyle

Kyle — Fri, 02 Oct 2009 14:47:29 +0000

I would add to this that not all Gas Stations make a profit on their gas at all. In a lot of cases they charge what they are told to charge by their supplier. The supplier is responsible for maintenance of the pumps, supplying gas, processing credit card transactions, etc..

The station itself may make as little as .01 per gallon on a gas sale with the majority of the profit of the sale going to the supplier. What the station gets is people stopping to get gas who will hopefully pick up some of that overpriced convenience food you speak of.
Kyle´s last blog ..My Identity may have Been Compromised

By: Jessica Deal

Jessica Deal — Fri, 02 Oct 2009 14:41:24 +0000

This is similar to what I call, Movie Theater Marketing. You can’t bring snacks into the theater (well, technically…) and then they charge you 5 dollars for a drink and 10 dollars for pop corn. Ridiculous.