Quote:
Originally Posted by Reggie Dunlop
Okay. So then encouraging fewer walk-ins is a good business practice. Gotcha.
Less eyeballs on that Mountain Scent tree-shaped cardboard air freshener hanging by the counter.
I have no doubt that these places make money selling crap other than gasoline. Some may even make gobs o' dough doing so.
The only bone of contention I have is claims they don't get a cut of fuel sales, however small it may very well be. I don't even begrudge them for doing so.
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I don't think that anyone's denying that they make a small margin. That small margin however doesn't necessarily cover overhead and make that much money for the owner. The point of contention that a lot of people miss is that when they see the price at the pump increase they assume that that particular gas station's margin's went up as well. In fact in a lot of franchise's it's written into their contract with the distributer what margin they charge. The increases or decreases in price come from further up the value chain.
Money is made by merging the convience store with the gas station. The customers that the gas station draws in combined with the customers that the convience store draws in combines two revenue streams with the overhead of only operating one location. The bigger piece of the pie is the convience sales for many of the above stated reasons. Now that it has been the trend for all gas stations to pretty much be convience stores, competition is now more fierce. Since the price of gas is clearly posted on the front sign, it's very hard to lift that up too much as that number is easily compared to the gas station down the street. However for other items they have a higher varition in prices and a higher opportunity to make more money.