WICHITA, Kansas -- Independent convenience store owners Kim Khan and Saeed Mansouri are selling the stations. They are casualties claimed by a Wichita, Kansas, gasoline price war between QuikTrip and Kwik Shop, driven out by a battle between two larger retailers to secure Wichita market share, according to a report by The Wichita Eagle.
Mansouri has sold five of his six stores, and the other is for sale. Khan's Valero is also for sale. "I had a dream to be an entrepreneur," Mansouri told the newspaper. "It's dead."
Other independents, [image-nocss] and some midsize operators, have left the business, are looking to sell or are cutting back their holdings in Wichita and across Kansas, the report said, the beginning of a downturn in Kansas c-store numbers, which had remained fairly steady since 2000, it added.
The economics of a c-store operation no longer work for small operators. With chains selling gasoline at or below cost to encourage customer traffic, the mom-and-pop operations face a choice: find a way to absorb gasoline losses or get out.
"I make money right now in my two other jobs, and this place takes it," Khan told the Eagle. Like Mansouri, he is an engineer.
It's simple economics, said the report: QuikTrip and Kroger/Dillons-owned Kwik Shop can buy gasoline in large enough quantities to get the cheapest bulk pricing. They can turn around and sell that fuel at or below those wholesale prices, then draw customers inside for a $1 soda, a $6 bottle of aspirin or a $2.50 loaf of breadall priced high enough to make up for the gasoline loss.
"Kwik Shop is discounting fuel 2 to 6 cents a gallon with that Dillons loyalty card," Barry Powell, general manager of Wenger Oil, a Newton, Kansas, gasoline wholesaler and c-store operator, told the paper. "A corporation like QuikTrip is going to say, 'Wait a minute. We're not going to allow you to get away with discounting and undercutting'."
QuikTrip and Kwik Shop officials did not return calls by the Eagle for this story.
Smaller operators like Khan and Mansouri, though, pay more per gallon for smaller quantities of wholesale gasoline, the report said. And they lose business to the psychology of an American shopper who will drive miles to save a couple of pennies a gallon.
And neither man can absorb credit card charges for gasoline sales. Most companies charge retailers 2% a gallon, currently about a nickel, to take credit card gasoline payments. With gasoline frequently selling at cost, it's an automatic loss whenever a customer pays with a credit card.
Indoor sales don't help much, Khan said, except in the summer, when soda sales skyrocket.
"The noose is tightening for everyone," Tom Palace, executive director of the Petroleum Marketers & Convenience Store Association of Kansas, told the paper. "The big guys are getting bigger and the small guys are getting out."
The gasoline price spike to $3 a gallon this year did nothing to help the small gasoline retailer, Jeff Lenard, a spokesperson for the National Association of Convenience Stores (NACS), told the paper. Instead, rising gasoline prices create a double-edged economic sword, Lenard said. "Customers will switch where they buy gas for a couple of cents a gallon," he said. "Loyalty? Forget it. At the other end, the squeeze is not just from the big convenience store chains but from retailersWal-Mart, Sam's, Costco, even Home Depot in Tennessee and Georgia."
Mansouri had six c- stores two years ago. Six weeks ago, he sold his fifth storea Conoco. There's one leftan Express Mart.
Mansouri was one of several Kansas independents who sought and failed earlier this year to get legislation prohibiting below-cost gasoline sales, said the report. That legislation has been "dead on arrival" for several years, said State Senator Les Donovan, vice chairman of the Senate Tax Committee.
"Nobody wants to do anything about it," Mansouri said. "It's not right.
"I have a mechanical engineering degree. After 12 years, I decided to become an entrepreneur. Now, it's time to go back."
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