How much profit goes to the local owner of a gas station if I buy gas, vs. if I buy convenience store items, etc.? Like, do they profit more from the gas, from the stuff in the store, or neither? Also, what percentage typically goes back to the parent company for both of those purchases?
A friend of mine used to own a gas station many years ago. He said that the profit margin on the gas was pretty small. Most of the profit came from the stuff inside the store.
I work at a gas station. Depending on market conditions, we make between three and forty cents per gallon. We haven’t made more than 15 cents per gallon in at least 5 years. Now, I think it’s about 7.
On convenience items, we price to make from 30-100%. Profit is smaller than you’d think on bottled drinks and cigarettes. Ice, coffee, and fountain soda is huge. We make something like 1000% on bagged ice, in stores that bag their own. Only about 75% when we get it delivered.
wheresgeorge, assuming that you work at, say, a Sunoco station (or whatever), does Sunoco get any of the profit from the convenience items, or does their cut come solely from the gas?
It’s important to carefully define “profit.” If the gas station owner nets buys 100,000 gallons of gas a year at $2.50/gal and sells for $2.65/gal, that doesn’t mean he’s sitting on a profit of $15,000 at the end of the year. Out of that $15,000 he has to pay for:
and so on. Profit is what the owner takes home after all those expenses are paid for (or, if it’s a publicly traded company, it’s what gets reinvested in the company plus what the shareholders get as dividends). If you’re a reseller (e.g. a gas station), it’s easy to calculate your margin on a product (selling price minus purchase price), but if you sell more than one single product it’s hard to say exactly what your profit is, since it’s hard to ascribe a particular amount of the above expenses to the management of any single product.