Convenience Store Vs. Gas Station For Sale

Sep 29, 2015

Convenience stores & gas stations can be a high-cash-flow businesses, with predictable revenues and an easily replicable model. With a quick entry into the business. Not a hard business to learn after taking fuel out of the equation. You are basically distributing products at a high profit margin to a local area as a convenience factor.

Some people may be curious whether they should invest in a convenience store or a gas station, and what’s the difference anyway? Well, there isn’t much of a difference afterall.

Is it a convenience store with gas or a gas station with a convenience store?

It is a confusing issue, and perhaps there is no difference between a convenience store with gas and a gas station with a C-store, but many experts still feel that there is a difference between the two.

So let’s look at it, again:

  • Convenience stores with gas— these operations are more convenience stores than gas stations. Examples of these set-ups are familiar names like 7-Eleven or Circle K.
  • Gas stations with convenience stores (mini-marts)— these operations are more gas stations than convenience stores, such as Mobil, Shell and Exxon gas stations that have convenience stores. In many cases, the garages and stations themselves have been retrofitted. Easy 1–2 man operation. No skills needed. No receivables.

Disadvantages of Buying a Gas Station or Convenience Store

There can be a large amount of capital needed for inventory and purchase of real estate. Hours may be long and convenience stores & gas stations will have lots of competition. There is also the definite risk of theft and drive offs. Unfortunately, there is also a LOW margin on gas. Some of the high capital costs, fuel price fluctuations, employee theft and employee retention are all problems.

The cost of fuel less your credit card fees of 2% can leaves you with margin. You will need to have high inside sales to compensate for the low fuel margin.

Good management is a must. The demand is constant and owners must stay on top of the numbers. This calls for long hours and steady involvement.

Advantages of Buying a Gas Station or Convenience Store

IF the business is self-employed it can generate a good income in a rising economy. The business can be operated in urban and rural communities. Entrance level of ownership is open to all regardless of ethnicity.

It can be mostly cash sales, a relatively low-tech business and easy to operate. Repeat customers with high inventory turns and good margins. Many different profit centers such as gasoline, lottery, convenience items, tobacco and alcohol products (in many stores).

Industry Trend for Convenience Stores & Gas Stations

But, by far, the key message is how the nation’s changing demographics will impact business in the years ahead. The demographics of aging baby boomers, digitally-connected millennials and a larger multicultural population will have a profound effect on c-stores.

More than 75% of c-store retailers polled in the CSP Outlook Survey said business conditions in 2014 were ‘good’ or ‘excellent,’ the highest percentage in the history of the survey. More than 60% expect some or great improvement in 2015. Considering that more than 56% of survey participants in this year’s survey were chains with one to 20 stores, it’s an assessment that shows even small businesses, the c-store industry’s core, are finally feeling an economic lift.

The facts that this is cash business, relatively less risky, easy to learn and replicate make this business appealing to many people. Some areas are obviously saturated and avoidable. In general, the industry is very marketable if and only if the seller has substantiating books and records for 3 years and that daily inside sales are minimum $1,000-1,500 (excluding extraneous revenues).

Very competitive industry with low fuel margins are forcing owners to get profits to come from the inside sale of groceries, food, cigarettes and other items. Expand the inside variety, sales, and profit, and depend less on the gas margins over which you have limited control.