Primary Revenue Generators
Gas stations generate revenue primarily through fuel sales, convenience stores, and additional services. They provide an essential service to motorists by ensuring access to fuel. Profits from fuel sales are made by purchasing gasoline from wholesalers and selling it to customers at a markup. The margin between the wholesale and retail price is a significant portion of a gas station’s income.
Enhancing Profit Margins
With slim profit margins of $0.03-$0.07 per gallon on gas sales, owners can enhance profitability by adding a convenience store, car wash, mechanic services, or food options. Gas station owners can earn between $40,000 – $100,000 per year depending on various factors such as location, size, and the type of station.
The initial costs of opening a gas station ranges from $250k to $2 million. Location affects the bottom line, with high traffic areas typically seeing higher margins. Additional services can also bring in more revenue.
The Changing Landscape
The number of gas stations has been declining for decades. A 2019 report predicts 80% of conventional gas stations could be driven out of business by 2035. Despite the challenge, well-located and well-run gas stations can still be good investments. Privately held stations see average profit margins of 1-5%.
Case study: Sheetz Inc has $6.6 billion in revenue, exemplifying the potential for substantial income despite the industry’s low margins.
Does owning a gas station make money?
Yes, owning a gas station can be profitable. However, there are many factors, including location, size, type of station, and additional services offered that will determine the actual income.
How much profit does a gas station make a day?
Profitability varies widely. As mentioned, the profit margins on petrol are around 2%, with most profits often coming from overpriced items in the convenience store and revenue from additional services.