Small gas stations appear to be struggling these days, while large c-stores with a number of gas pumps are popping up and prospering, at least in Lancaster, Pa., Lancasteronline.com reported.
“If we were relying on gas sales alone, we’d be out of business. There isn’t enough of a markup to stay open,” said Jeff Mearig, an owner of Brunnerville Garage in Lancaster.
At least five stations in Lancaster and its suburbs closed their doors during the past three years, but meanwhile larger c-stores with numerous gas islands have opened and succeeded. The opposing trend began decades ago when consumers began shifting their buying habits.
The overall number of gas stations in Lancaster County has dipped to 183, down 45 (or 19.7%) since 1991, according to county records, Lancasteronline.com reported. The decline is even more severe in the city where there are now 14 gas stations, down a third from 21 in 1991.
So why are c-stores doing so well when small gas stations are suffering? The answer stands in the way the different models do business.
C-stores with gas islands are diversified and offer foodservice and other merchandise that can make up for lost profits at the gas pump. By showcasing lower gas prices, c-stores work to attract motorists to the pumps and then inside the store where they are likely to purchase products.
“The reality of the (c-store chains) is, they live and die by their ‘inside’ sales….,” said an industry executive, who requested anonymity. “If they were forced to run their businesses based on the profits of their gas islands, they’d have a very difficult time,” he added.
Meanwhile, many small gas stations are further at a disadvantage because they buy gas from a local distributor, which charges a fee to deliver the fuel. C-store chains have the advantage of being able to save money by buying directly from refiners, while others have their own delivery fleets.
With business changing, it’s important to find balance. Gabe Olives, vice president of petroleum and information technology, Turkey Hill Minit Markets compared the c-store strategy to a personal investment strategy. “A good stock portfolio is diverse across sectors,” said Olives. Diversification is exactly what many c-stores today are focusing on, upgrading foodservice options and providing other merchandise to attract consumers within the store.