Gas Pump Pain Hits Convenience Stores
When you fill up at the gas pump, it's not the fuel the station owner is making the most profit on, but the snacks and drinks inside the convenience stores. But, as gas prices continue upward, the convenience stores are feeling the pinch.
"It is a known fact that the corner gasoline service station does not make a big profit on a gallon of gasoline," said Sal Risalvato, Executive Director of the New Jersey Gasoline, C-Store and Automotive Association. "The average profit on a gallon of gasoline is ten cents or less. Some make five cents or less. Meanwhile, the profit on a gallon of coffee is about five dollars a gallon."
"It has always been the marketing process at gasoline service stations to use gasoline as a loss leader, with very minimal profit in order to have people come into your location and drive up to your gas pumps, so that while they're there they will either purchase items from your convenience store or use you for some type of service on your vehicle," said Risalvato. "While the marketing hasn't changed, demand has and there are fewer gallons of gasoline being sold as people adjust to the high price. That could effect the sales inside the convenience stores."
"Good business practices require that small business owners raise their profit margins accordingly as the price of the product goes higher, but competition is constantly putting a downward pressure on their profit margins. I always caution them to use their calculators and make sure there's enough profit margin on a gallon of gas so they don't get put out of business," said Risalvato.