Monday, February 11, 2019
First Time Entrepreneurs Flock to Buy Convenience Stores with Gas
Source: NRC Realty & Capital Advisors, LLC
While online sales have impacted more industries, convenience stores with gas stations are going strong today. Over 121,000 gas stations are operating in the U.S. alone, according to Statistic Brain Research Institute. More than 80 percent of these have convenience stores, and annual review is estimated at $250 billion.
Convenience stores selling gas are a great choice for people looking to buy and operate a small business. There are many reasons you should consider investing in one: growth, ability to add other income streams as well as the fact they make a good business for first-time entrepreneurs and offer an opportunity for a family business.
Convenience Store Businesses Attract Customers
Convenience stores sell 80 percent of gas purchased in the United States, according to 2017 statistics from the National Association of Convenience Stores. While selling gas is profitable, the stations that generate the most revenue have sizeable convenience stores (and good locations). Customers are more attracted to larger facilities that have wide selections of convenience items, expanded coffee offerings and fresh food and sandwiches. Offering customers additional services such as car washes also attracts customers, and those revenue streams are highly profitable. Twenty-two percent (22%) of in-store sales come from food service, and car washes take little effort but generate more than $86,000 on average per year.
Steady cash flow
Gas mileage rates in cars have improved, and more electric cars are on the road. However, the impact on gas stations is negligible, particularly with more people driving pickup trucks and large SUVs. Clearly, gas stations are sure to be around for a long time and produce a steady income for owners. After all, they do not sell something that can be ordered online!
Convenience stores sales are steady, and consumers view them as the go-to place to grab snacks, bottled beverages, lottery tickets and the place for quick grocery items.
Ideal for a beginning entrepreneur and family business
A gas station provides newbie business owners with a very solid and relatively easy business to operate. It does not require a degree or specialized skills (unless there is a service station doing repairs or hot food being served). A standalone gas station or one with a convenience store has low labor costs, and can be operated easily by a husband and wife or with extended family members. This makes a gas station with a convenience store ideal for a family that can split responsibilities and hours.
Purchasing a convenience store with gas does have risks, like any business. Location is important, and changes in traffic patterns or a major construction project can drastically reduce sales. Consumer tastes are already changing the merchandise featured in convenience stores, which now typically stock fresh fruit and wide coffee options alongside beef jerky and doughnuts. So, store owners need to get to know their regular customers and their preferences.
The biggest risk for a buyer is failing to understand the business and its financials. Thoroughly check out the business, and even watch the traffic there at different times of the day. Make sure the imaging of the station is current since most major gas brands update their graphics and images regularly. Also, be aware that many gas station and convenience store owners do not keep solid financial records. Conduct due diligence on facts and figures, such as gasoline and merchandise sold inside the store.
While owning a gas station or convenience store does not require special skills, performing thorough due diligence before buying or selling a business does. Retaining the services of experienced professionals helps. At NRC Realty & Capital Advisors, LLC we have assisted buyers throughout the country, and have extensive experience with convenience store and gas stations. To find out more, contact us online or at (800) 747-3342.
To see a list of convenience stores and gas stations for sale, click here.