Article – Looking To Buy A Gas Station Business – C-store – Service Station – Pumper?

If you’ve found quite a few gas stations for sale and are evaluating which one is the best for you, there are certain trends that you should be aware of before putting a contract for sale out. There are three basic types of gas stations. One is the old type service station with service bays and usually a small area to sell convenience store items. Two, a convenience store with fuel that can have anything from a 500 square foot store to very large facilities and then there are the “pumpers.” Pumpers are defined as stations that average 100,000 gallons a month in fuel gallonage and concentrate on the fuel as opposed to the inside sales. In reality, a “pumper” is a station that does hundreds of thousands of gallons a month and depends heavily on fuel sales.

From a profitability point of view and a financing point of view, the traditional convenience store with fuel should be more desirable. Of these three types, it is in general the most stable of revenues. Because most if not all convenience store items are sold in the store, as long as it is a well run business, it should have less economic impact than a service station or a pumper.

Traditional service stations are slowly but surely disappearing. They are either having the tanks pulled and turning into repair stations without fuel, or they are being razed and rebuilt with the new types of convenience stores or dealers are building out the bays and turning that section into a convenience store. Many times the bays will be leased out to mechanics. If for whatever reason the mechanics that lease the bays are having difficult times and they can not pay the lease, the dealer is out a significant portion of revenues. Attracting a good mechanic can be problematic if you lose the person there.

“Pumpers” are less desirable today because fuel gallonage has actually gone down in the past years and so has pool margin. When you are looking at a station that has to depend on high fuel gallonage to insure your profitability, these economic swings can have major ramifications. This rings true especially if the station is a kiosk (with very small or no building at all) where there is minimal amount of convenience store items available. In this case, there truly is less collateral because there basically is only land, some equipment and good will. In case of default, they most likely would be the most difficult to sell at market value.

Regardless of what type of gas station you are looking to purchase, location will always be the most important factor in purchasing a gas station business.

Harold Jaynes is with PetroMAC, the premier source for financing gas stations, convenience stores and truck stops. Contact PetroMAC if you’re looking for prequalifying your loan if you’re looking to buy a gas station.