Gas Stations Business
Would it be possible to buy one gas station, use the profits of that to buy another, use the profit of that to buy two more, and keep multiplying and have like 100 gas stations? Like if you were to hire managers for each gas station and then hire Directors to manage multiple gas stations, would it be feasible? Ive seen many gas stations for sale where they have 100-200k cash flows, so if you were to hire a manager for say 40k, couldn't it work? Im not saying that this would be passive income, like could one start and run a company this way? Asking on the IB platform since you guys facilitate in big deals. Thought you can provide some insight.
You should patent this business model. Never heard of expanding a business using this method before.
I looked into gas stations when I bought my first small business. Didn't go ahead with it for various reasons, but just a few pointers:
- Margin on gallons is low, it depends on the exact area you are in, but don't expect to make millions through gas alone
- Real money is in the convenience store, especially through tobacco, alcohol, cannabis products (where legal), lottery tickets, etc
- Depending on region, also look into a car wash and/or vehicle repair shop (adjacent to the gas station)
- Make sure you understand the EPA rules and other legislation, what type of tanks are at this station, when the last checks were, etc- overhaul of these tanks is not cheap
- Peak oil; so apparently this was reached in 2019, understand the implication on your investment and how the local market reflects the overall changes
It is not a dying business, as long as you know which station to operate or buy.
Family friend made tens of millions cashing out on the car wash businesses he accumulated attached to his business partners’ gas stations. I know he made millions and his partner went bankrupt
Murphy USA - Presentation
Edit: here's what I was looking for: ARKO - convenience store company (perhaps helpful / related)
ARKO - Investor Presentation (July 2020 & 2021)
ATTRACTIVE INDUSTRY DYNAMICS:
"At a Glance"
5. Large, Growing, Recession-Resistant Industry
2. Leading Industry Consolidator (EV/EBITDA Comps)
Sales - by Fuel / In-store, and EBITDA
That is a very good source/deck. Thanks for sharing.
this is amazing. thank you so much. How much does a normal gas station making a net profit of 100k cost?
I did an internship at a downstream energy bank. Something to consider is the market experienced a barbell effect. Lots of small operators with a few stores in their hometown and lots of large players that own 200+ gas stations / c-stores across entire regions. You could acquire one store and grow from there, but that's exactly what these large players did in the 70s and they haven't stopped since. It's a good model and more popular than you might realize. There's money in it, these guys led great lifestyles in LCOL areas of the Rockies region and the South, but you'll have to live near your first station and likely operate it. Overall a good business but the 20 yr outlook includes a decent amount of capex to add in charging stations.
I worked in commercial banking for two years and ran with a lot of gas station financing deals over that time. Lots of folks making really great money, especially when you add a conv. store to the mix. Additionally something to think about that isn’t talked about enough is the dynamics of demand for different tiers of fuel as this can significantly increase margins. The crowds that live in rural areas typically tend to lean further to more premium fuel, which can be lucrative.
If you’re in a hot real estate market like me, the appreciation on your gas station will by itself help you get your second by the time you make it to Year 2.
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