Gas stations pump up sales of food products to stay open
Rocky Mountain C Stores President Gary Dean sees the future of gas stations in his plans to include a drive-through window for Wienerschnitzel products at his 333 N. First St. store.
The store plans to serve Tastee Freez ice cream treats and fast food through the proposed drive-through window as well. Dean, who works in Grand Junction, said he hopes to have the operation running in June.
Gas stations all over the nation are seeking ways to stay fresh and attract customers through partnerships with companies such as Subway and Starbucks, Dean said. It’s not just about bringing in gas-guzzling cars. Adding merchandise inside a convenience store can make the difference between staying alive and going out of business.
“You can’t sell gas alone and make it anymore,” Dean said. “If you don’t change, you’re going to go out of business.”
There are a few reasons why the bag of chips and super-sized drink a person buys inside a gas station are profitable to the station, and the tank of gas that person just bought is not.
First, if that person chooses to swipe a credit card at the pump, the credit card company charges a fee paid by the station. That fee ranges from 2.5 to 3 percent, which means up to 12 cents on a $4 gallon of gas, above the four- or five-cent margin most stations charge above market price for the gas, Dean said.
“You can’t go out there and negotiate a lot with big credit-card companies,” he said.
The manager of a gas station on North Avenue said he no longer makes money from selling gas because of price wars. The manager did not want to give his name or have the name of his business printed for fear of retaliation from competing stations.
He sold his gas at three cents above market value before other chain stations moved in around him and continually lowered prices the second they noticed a nearby station had a lower price, he said. That made it hard for him to stick to those prices.
His indoor sales are the only ones from which he profits.
“If it wasn’t for the few people who come inside the store, it wouldn’t be cost-effective to stay open,” he said.
Convenience-store sales can determine whether a station has enough money to buy its next load of gas, according to Dean. The average unleaded gas price in the U.S. was $3.59 a gallon last week, up nearly 80 cents year-over-year, according to the U.S. Energy Information Administration. Diesel had increased to $3.999 in the Grand Valley on Friday, up more than a dollar from the average diesel price in the Rocky Mountain region a year ago.
Every increase means gas stations have to prepare to shell out more and more for their next load, Dean said.
Prices don’t scare just stations when they’re making the purchase.
Betty, a manager at Acorn Travel Plaza, 2222 U.S. Highway 6&50, who did not want to give her last name, said her station has regular customers she suspects would keep business humming if prices get above $4 a gallon again. But she said increasing prices “are always a concern” and could lead to fewer customers if they rise too high.
“After awhile, people are just going to stay home,” she said.
It’s also harder to make a profit when you’re selling less gas. Some gas stations have never fully recovered business since residents began leaving town after the local unemployment rate’s steady climb in early 2009 and the popularity of “stay- cations” arose all over the country in 2008.
The last time gas prices flirted with the $4 level in Grand Junction, manager James Shanahan’s business, Atlas Conoco at 1917 N. First St., survived. But he still hasn’t regained the sales he recorded three or four years ago, when he sold 1,300 to 1,600 gallons of gas daily.
“Now, we sell 2,000 gallons a week,” he said.
Not all stations have survived the new credit-card fees, changes in business and gas prices and the increasing dependence on food and sundry other inside purchases.
On North Avenue alone, four stations closed in recent years, and a fifth station at 2830 North Ave. closed in December because it was affiliated with the now-defunct Eastgate City Market.
The street has five stations left in a less-than-four-mile stretch.