How to Build a Gas Station: 8 Things You Need to Know
Is building a gas station your American dream? According to the National Association of Convenience Stores (NACS), there are more than 150,000 fueling stations across the United States. While the long-term demand for fossil fuels may be in flux, the market for gasoline and diesel remains strong for the foreseeable future.
If you have questions about how to build a gas station, here’s some general information to help you as you begin your journey of opening a gas station business.
The following are eight things to consider when building a gas station:
- Equipment and inventory
- Customer convenience
- Permits, licenses, insurance, legal and consulting fees
- Branding, marketing and promotion
1. Location, Location, Location
Like any other type of real estate, location is a critical factor in determining service station building costs. Whether a station is located in a city or suburb or near a freeway on or off-ramp can impact not only the price you pay for gas but what you can reasonably charge your customers. In addition, the ingress and egress of a particular location can make or break a gas station business.
Business consultants specialize in helping people choose ideal locations for gas station businesses to maximize profit potential.
Hiring an experienced construction company is one of the most important decisions you will make when building a gas station. Choosing a gas station contractor with design and engineering skills can mean the difference between a completed project and one that drags on with endless complications – and expense.
3. Equipment and Inventory
The type of station you’re building, the number of gas pumps, and underground storage tank size are just a few variables that come into play when determining equipment, inventory and gas station start-up costs.
While full-service gas stations have disappeared mainly due to staffing costs and consumer preference, there are still different types of fueling stations. These include gas stations with car washes, convenience stores and service bays, each with its own equipment and inventory needs.
4. Customer Convenience
According to Deloitte, fuel retailers would be wise to focus on increasing consumer convenience while adapting to changing demographics and energy trends. Expanding products and services is one way to attract customers and improve user experience. In addition, ancillary sales have shown to be an effective way to pad fuel profit margins, which are very competitive.
Many gas stations typically offer the following convenience items:
- Lottery tickets
- Coffee and soft drinks
- Air Stations
5. Permits, Licenses, and Insurance
The petroleum industry is highly regulated, requiring permits and compliance with environmental regulations that vary from state to state. Make sure to research your respective state’s business requirements, which may include:
- Fire and building inspection permits
- Pump and tank inspection permits
- Water discharge permits
- Permits to sell alcohol, tobacco and lottery tickets
- Motor fuel outlet licenses
- Certificate of occupancy
Operating a gas station is risky, potentially exposing you to property damage, environmental hazards, equipment breakdowns, employee injuries and more. Therefore, it’s critical to obtain insurance to protect you and your business from these threats.
6. What About Franchising?
While many independent gas stations sell “unbranded” fuel procured from various suppliers, other gas station owners enter into franchise agreements with major gasoline companies. Companies like Shell, Arco, and Mobil make it easier to attract customers with the power of their brands, but franchising comes with its own set of challenges.
Therefore, it is critical to evaluate the advantages and disadvantages of franchised vs. independent gas stations. Some issues you must consider when franchising include:
- The terms of the gas station franchise agreement
- Ownership and maintenance obligations related to underground storage tanks and fuel pumps
- Fuel sale quotas and rebates
7. Branding, Marketing and Promotion
As mentioned above, franchising from a major fuel supplier enables you to benefit from their branding, signage and trademarks. In addition, while fuel suppliers often run company-wide promotions and incentives, it’s often up to you as an independent owner to facilitate the marketing of these programs.
If you choose to become an independent supplier, you should assume that branding, marketing and promotion of your business rests entirely with you, requiring you to set aside funds for these purposes.
Operating a successful retail business of any kind requires you to invest in recruiting and training your employees. Since payroll is likely to be one of your most significant expenses, make sure your employees are trained to exemplify the level of customer service you want to provide.
Choose FASTECH to Build Your Gas Station
If you’ve been looking for an experienced gas station contractor, you’ve come to the right place.
FASTECH specializes in designing and constructing petroleum fueling facilities, fleet fueling facilities, retail service stations, bulk petroleum facilities, and truck stops.
We have over two decades of experience completing projects ranging from multi-tank system installations to specialty one-off designs, system upgrades, tank removals, and retrofits.
To learn more or ask about our consulting services, contact us today.