Petroleum Retail Outlet Renovation Reaps Rewards

Gas Station Profit Soars after Hiring Woods Consulting

Background

An established petroleum retail outlet - serving as a second income source to its owner - had been quietly deteriorating. Sales volume was flat, and the business was on the verge of losing money.

The Challenge

Renovate the business... or walk away?

Observations

  • The location of the property is excellent - situated on a high-traffic, urban street with reasonable visibility.

  • The property itself was somewhat cramped, but acceptable compared to typical urban locations.

  • The site sells gasoline, a significant volume of auto propane, and has a small convenience store.

  • The full-serve site has four gas positions, four propane positions, and operates the gas and propane from a small kiosk on one of the islands.  The gasoline islands are frequently congested at peak times, sometimes encroaching on the municipal roadway.

  • The convenience store is housed within a larger building which contains the owner’s principal business.

  • The gasoline supply contract is with a solid regional independent with whom the owner has a long and generally content history.

  • Propane sales, although considerable, were not profitable given the large labour force necessary to pump the fuel.  Further, the sales trend for propane was negative.

  • The trade area was stable.

  • Gasoline sales were flat even though several competitors had closed recently and competitive sites had increased in volume.

  • Convenience store sales were quite low in relation to the number of fuel customers.

Solutions

Woods Consulting recommended a medium-scale renovation that included the following changes:

  • Eliminate the propane offering; install four additional gas positions in its place.
  • Replace the underground storage tanks and piping.
  • Switch the service mode to self-serve.
  • Renovate the convenience store and institute modern merchandising as part of its new petroleum marketing plan.
  • Construct a canopy over the pumps and other gas station equipment.

The Payoff: Gas Station Profit Increases Significantly

The gas station owner accepted Woods Consulting's recommendations; within six months, project drawings were done, permits obtained, construction tendered, and the renovations completed.

One year after re-opening the gas station, the fuel sales volume had increased 11%. Expenses were reduced by 50%.

Two years later, the fuel sales volume increase topped 16%.

Eight of the 12 months in the second year after renovation showed historically high volumes. Convenience store sales doubled. The owner reports a broader customer base, including more women, which he attributes to the improved site image.

All in all, this was a very successful project for the owners petroleum retail outlet, that used the experience and knowledge of Woods Consulting to their advantage.

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