FRAMINGHAM, Mass. -- Fuel volume is vital to site profitability for capturing fuel margin, driving inside traffic and attracting the habitual repeat customer, especially as cigarette sales decline in volume. Maximizing it is essential, and so is exceeding the threshold of 25,000 gallons per site per week.
In my 40 years of working in transport fuels, from the guy who washed your windshield to former CEO of Gulf Oil, I have found nine buttons that are critical to maximizing fuel volumes. They are …
Like politics, all retail pricing is local. Sadly, I have seen some retailers in the name of speed use one price for all locations. Others spend too much time looking at acquisition cost and trying to fine-tune margin.
The reality is it’s the competition on the street that determines your price. Establish your volume for your site, then raise or lower price to your competition to calibrate the volume.
Fuel is an impulse buy, like salty snacks and candy, except your customer is moving at a high rate of speed with his or her eyes presumably fixed on the road ahead. Making your site more visible and seen earlier in the direction of travel can be a game-changer for volume.
Accessibility and parking
All drivers want easy-in, easy-out access, and they don't want to play bumper-cars on the gas-station lot. Having adequate parking available in the front of the store is key to getting female shoppers to come inside—or, really, any customer who wants to go inside after someone who looks like Conan the Barbarian pulls up behind their car.
Discounts on fuel and special promotions are now the norm either through automated clearing house (ACH), company loyalty or special credit-card programs.
There are 5 million fleet vehicles in the United States, and many excellently performing sites have as much as 7% of their volume in fleet.
Fuel differentiation and quality
While branded fuels are dead, drivers still want to know the fuel is of the highest quality. And some want either diesel exhaust fluid (DEF) or higher blends of ethanol at the pump.
Special and affinity programs
More fuel is being retailed with special attributes, such as fixed-price, internet-based fuel sales through an offer such as First Fuel Banks; carbon-mitigation programs such as GreenPrint; and 1- to 2-cent-per-gallon charitable donations.
A final word of advice
Of course, car count and population density are also important variables in fuel volume. The problem? These are fixed when you build or buy the site.
Remember that every additional 5,000 gallons per week brings the retailer $45,000 in annual fuel margin and $55,000 in annual inside margin. An extra $100,000 in gross margin for every 5,000-gallon-per-week increase in fuel margin is enough incentive to take action.