Gas stations have long been a staple of the American landscape, providing a convenient stop for drivers to fuel up their vehicles. Now, they have evolved into full-service establishments that offer a wide range of products and services, making them an attractive investment opportunity for entrepreneurs.
According to industry reports, the gas station market is expected to grow at a compound growth rate (CAGR) of 4% to 2026, while the c-store industry has seen a 1.5% increase in store count in 2023, reaching a staggering 150,174 c-stores. The current growth of the gas station and c-store industry makes it an opportune time for entrepreneurs to invest, especially since over 60% of gas station and c-stores are independently owned.
Read through the top six reasons why you should also consider making the investment in a gas station and c-store.
1. Multiple Revenue Streams
Gas stations offer multiple sources to generate revenue other than just gas sales, which helps operators mitigate risk. In fact, most gas station profit comes from these additional services.
Roughly 80% of gas stations also include a c-store, according to the National Association of Convenience Stores. C-stores are a great option for additional revenue since about half of gas-buying customers go into the actual storefront. Customers most commonly purchase popular, high-margin items like beverages, snacks, grocery items, alcohol, or simply a sandwich. These products are where gas station operators can bolster their margins, especially with food services. Over 36% of in-store gross margin comes from food services, along with 25.6% of monthly in-store sales.
Gas station owners can also diversify revenue streams with a carwash or a QSR (quick-service restaurant). By offering multiple services, gas station businesses can adapt to changing market conditions and customer preferences, making them a smart investment for entrepreneurs.
2. Steady Demand
The steady demand for fuel is one of the key advantages of investing in a gas station business. Despite the state of the economy or any other external factors, people will always need to drive. During times of economic uncertainty, consumers may cut back on discretionary spending, which can hurt businesses that rely on luxury or non-essential products. However, gas station businesses are less susceptible to these types of fluctuations because the need for fuel is a necessity, not a luxury. Even during the Covid-19 shutdowns, gas stations were deemed essential businesses.
3. Franchise Opportunities
A franchise gas station offers several advantages, including a proven business model, established brand recognition, and ongoing support from the franchisor. These benefits can be especially valuable as they can help reduce the risks and uncertainties associated with starting a new business from scratch.
A franchisee can skip the trial and error process of developing a new business model by leaning on the franchisor who has already developed a successful business model that has been tested and refined over time. The franchisor can provide comprehensive training and support, including marketing and advertising strategies, operational procedures, and ongoing guidance, which can help ensure the success of the franchisee's business.
By investing in a gas station franchise, the franchisee also benefits from the existing reputation and customer loyalty associated with the franchisor's brand. This way, the franchisee is able to attract customers more quickly and build a strong customer base, which can be especially important in the highly competitive gas station market. Additionally, the franchisor already has access to a network of suppliers and vendors, which helps the franchisee obtain products and supplies at a lower cost. Taking advantage of an existing network that has already attained economies of scale saves money and increases profitability, which is especially important for a small business owner.
4. Low Labor Costs
Unlike other businesses that may require specialized skills or expertise for much of the staff, a gas station businesses primarily require good customer service skills for the majority of its employees. This means that entrepreneurs who are looking to start a gas station do not need to invest heavily in specialized training or hiring highly skilled employees.
Plus, advancements in technology have made it easier to operate a gas station with minimal staffing. Plenty of operators run their site with only one employee per shift, meaning that with a handful of hourly employees, you can operate a business that generates millions of dollars. Customers can pump their own gas without the need for a dedicated attendant in most states. If you decide to add a carwash to the business, that too has low labor requirements. At a time where it’s difficult to find employees, low labor business models are appealing.
5. Independence
Starting a gas station business offers entrepreneurs a unique opportunity for independence and control. As an entrepreneur, you have the freedom to customize your business to fit your lifestyle and preferences. Whether you want to be hands-on and involved in the day-to-day operations or take a more hands-off approach as an absentee owner, the choice is yours. Many entrepreneurs opt for the latter, hiring a capable manager to handle the daily tasks.
Additionally, being in control of your own gas station means you can make certain decisions regarding product offerings, marketing strategies, and customer service, ensuring that your business aligns with your values and vision. So, if you're looking for a business venture that offers autonomy and the chance to be your own boss, investing in a gas station may be the perfect opportunity for you.
6. Flexible Financing Options
Although it may seem daunting, obtaining funding for a gas station business is easier than you might think. As an experienced gas station real estate and financing brokerage firm, PetroCal Associates arranges loans exceeding $1 million to help entrepreneurs through the process of acquiring, building, or renovating.
Through our network of trusted lenders, we can pair you with the right lender and the right loan that aligns with your needs and the specifics of your project.
To learn more about what types of financing options are available to you, watch the Gas Station Financing 101 webinar now.
Start Investing in a Gas Station Today
Investing in a gas station offers entrepreneurs several benefits. The multiple revenue streams, including convenience stores, carwashes, and fast food, provide opportunities to diversify income and adapt to changing market conditions. The steady demand for fuel ensures a constant stream of customers, regardless of economic fluctuations or demographic factors. Franchise opportunities offer proven business models, brand recognition, and ongoing support, reducing the risks associated with starting a new venture. Additionally, low labor costs and the ability to customize and control the business provide independence and flexibility. With flexible financing options available, entrepreneurs can more easily obtain funding for their gas station ventures.
Overall, investing in gas stations presents a smart and lucrative opportunity for entrepreneurs looking for a stable and profitable business venture. To learn more about the advantages of investing in gas stations and how to navigate the financing process, contact PetroCal Associates, a trusted and experienced partner in the gas station industry.
