Petrol Station Start up

opmb

I was thinking of renting a petrol station. My father is big in delivering home heating oil and supplying DERV (Diesel) down in County Kildare but doesn't have any experience with petrol stations or the retail end of a petrol station. Can anyone help me with profit margins etc... I am looking at a petrol station to rent down in Laois. The shop is fully fitted out with deli counter etc... I just have to stock it and the rent is €1600 P/M I think it would be a great starter to introduce me to the game and potentially to expand the home heating oil business down to that area. Any advice at all would be greatly appreciated. Thank you

arbitrage

Profit margins would vary massively from station to statiom mainly based on location and proximity to competitors.

What would a thousand litres of unleaded cost you versus the multiples?

mikemac1

More profit in a litre of lucozade then a litre of fuel

Good that you have the deli, now run it well and give good prices.
Yes it will cost you money in supplies and staff but once you get a good name then you will get trade.

And once people are there they'll pick up other stuff too

In our home town in Tipp the cheapest station does have great business selling fuel but it's not how they they make their money.
They have the largest shop of any station

If you're going to do a basic operation and rely on fuel to give you a profit well you'll survive but it will be lean times



Also...have a air pump so people can service their tyres.
However don't make it free as some people don't respect what they get for free.
It'll be tossed on the ground and people will drive over it.

You can still make it free but on a deposit scheme, like give in two euro and you get it back when you are finished and the pump is put back correctly

but43r

Filling stations have very low margins on fuel. Shop is what makes most money.
I'd say margins on home heating oil would be much more than they are on petrol and diesel in filling stations.
Do you think the shop would do well? Is the filling station on side of a busy road?

belcampprisoner

Bypasses have killed petrol stations

In America you pay at the pump so you don't even go inside to shop


http://www.askaboutmoney.com/showthread.php?t=184

opmb

mikemac1 : I would be mainly concentrating on the retail end of things instead of the pumps as I understand there is really not much at all to be made in Petrol or Diesel. I would compare the shop to a small centra in size. There is already air and water on site I would have to see about getting one of those devices fitted because they are pretty close to the entrance of the forecourt and could get damaged if not put back properly.

but43r : You would be surprised with home heating oil, out of 1000 litres after paying your driver and expenses there is only around €30 profit its a very tight game and it really is strictly cash on delivery these days because you just can't take that risk anymore. I am thinking I would make 0.03c per litre at the pumps after credit card expenses, electricity and maintenance for the pumps. I believe the shop would do well the only thing is the town has been bypassed but there is still a large volume of traffic that goes through the town.

Does anyone have any ideas what would the profit margin be in the shop?

opmb

but43r : Also would like to point out majority of people these days are certainly not ordering 1000 litres of home heating oil usual order are 200 to maybe 400 litres now

sandin

at least you know there's no prifit in fuel - this is just a traffic driver to the shop.

within a shop, your money maker is the deli - coffee, sambos, minerals etc

Couple of extra questions

How much are the rates?
How much are the water charges?

Then add staff costs - possibly circa 70k - 80k to allow for 2 full time + couple fo part time.

Also ask why did the previous guys close.

Trojan

There was another thread on petrol stations recently.

(Out of interest, I'd like to see Hammertime's stats on cost and pricing).

The Dagda

this website seems to contradict the description of fuel as having no profit margin

http://www.forecourt.ie/Forecourt%20News/

irish_bhoy09

id say thers very little to be made now a days,and the towns bypassed!!

killiank

The Dagda wrote: »

this website seems to contradict the description of fuel as having no profit margin

http://www.forecourt.ie/Forecourt%20News/

I read that as being the schedule price that companies quote. So what companies do is they publish their schedule price which is the same for everyone but what makes your price different is the rebate that you get from schedule. Obviously it is the rebates that arent released to the public.


Also if you consider that these prices do not include VAT at 23% for diesel or unleaded & you will also have to pay approx 1c per litre to have it delivered. If you take the topaz proce of 1.401 & add 1 cent delivery & then 23% for vat you now get a wholesale cost price of €1.7355. So these prices on their own don't mean a huge amount to the average person as the rebate has not been applied. I have also mentioned before about natural vapour loss of fuel & leaking tanks.

The Dagda

killiank wrote: »

I read that as being the schedule price that companies quote. So what companies do is they publish their schedule price which is the same for everyone but what makes your price different is the rebate that you get from schedule. Obviously it is the rebates that arent released to the public.


Also if you consider that these prices do not include VAT at 23% for diesel or unleaded & you will also have to pay approx 1c per litre to have it delivered. If you take the topaz proce of 1.401 & add 1 cent delivery & then 23% for vat you now get a wholesale cost price of €1.7355. So these prices on their own don't mean a huge amount to the average person as the rebate has not been applied. I have also mentioned before about natural vapour loss of fuel & leaking tanks.

I think you should read it again.

It's wholesale PLUS VAT .

killiank

The Dagda wrote: »

I think you should read it again.

It's wholesale PLUS VAT .

Yes so you need to add the VAT to it.

The Dagda

killiank wrote: »

Yes so you need to add the VAT to it.

Jesus it's not rocket surgery, it clearly states the prices include VAT @ 23%

killiank

What I see is the following :

"Current Prices at 25/09/12[quoted wholesale+VAT @23%]"

I interpret that as saying you need to add the vat & you are saying its including the VAT.

I have a file of purchase invoices in front of me from Texaco Joint Fuel Terminal in Alexandra Road - from Valero - Texaco. I take one on the 21st of September for 18,000 litres of Diesel collected by the company directly from the terminal so in this case no haulage fee applied. I'm not going to disclose the rebates for obvious reasons but roughly speaking if I add VAT to the Texaco diesel price on the website & take off this customers rebate its not a million miles off the purchase price per litre on the invoice in question. Ive checked on this date for a number of my customers who buy from Texaco & on the 21st of September 2012 & all are paying significantly higher price on that day.

testicle

killiank wrote: »

Yes so you need to add the VAT to it.

My reading of "quoted wholesale + VAT" is that the quoted prices include VAT.

The Dagda

killiank wrote: »

What I see is the following :

"Current Prices at 25/09/12[quoted wholesale+VAT @23%]"

I interpret that as saying you need to add the vat & you are saying its including the VAT.

I have a file of purchase invoices in front of me from Texaco Joint Fuel Terminal in Alexandra Road - from Valero - Texaco. I take one on the 21st of September for 18,000 litres of Diesel collected by the company directly from the terminal so in this case no haulage fee applied. I'm not going to disclose the rebates for obvious reasons but roughly speaking if I add VAT to the Texaco diesel price on the website & take off this customers rebate its not a million miles off the purchase price per litre on the invoice in question. Ive checked on this date for a number of my customers who buy from Texaco & on the 21st of September 2012 & all are paying significantly higher price on that day.

That's because you're adding the "roughly" 20% margin that the website in question is indicating. Not VAT.

killiank

I accept that you could interpret it as meaning that it already includes the VAT. I was thinking myself along the lines that If I quote someone €100+Vat@23% I mean €123 is what I expect to be paid.

I've been working in the oil industry for 16 years in different roles. I was just trying to explain why the figures quoted are so different to the actual figures for that day. As I mentioned in my point above the cost price per litre on the day in question was significantly higher than that website says it was. I know Texaco always quote a schedule price & you deduct a rebate off it. I dont know where or how the website comes up with the figures. I know they don't make anywhere near 20% on fuel. Margins on Kero & Gas Oil in service stations is higher but sales in service stations of these would be very low.

One example of a service station I currently deal with.
For the month of August 2012 the average cent per Litre margin was 4.97c equivalent to a margin of 3.94%. For July average cent per litre was 5.17 giving a margin of 4.27%.

I work with 11 other service stations & the margins are pretty similar & in some more competitive places less. I'm not saying no one in the oil industry makes a lot of money. Its just not the guys who run the service stations. Downstream is not where the money is.

Do you work in the industry?

The Dagda

killiank wrote: »

I accept that you could interpret it as meaning that it already includes the VAT. I was thinking myself along the lines that If I quote someone €100+Vat@23% I mean €123 is what I expect to be paid.

I've been working in the oil industry for 16 years in different roles. I was just trying to explain why the figures quoted are so different to the actual figures for that day. As I mentioned in my point above the cost price per litre on the day in question was significantly higher than that website says it was. I know Texaco always quote a schedule price & you deduct a rebate off it. I dont know where or how the website comes up with the figures. I know they don't make anywhere near 20% on fuel. Margins on Kero & Gas Oil in service stations is higher but sales in service stations of these would be very low.

One example of a service station I currently deal with.
For the month of August 2012 the average cent per Litre margin was 4.97c equivalent to a margin of 3.94%. For July average cent per litre was 5.17 giving a margin of 4.27%.

I work with 11 other service stations & the margins are pretty similar & in some more competitive places less. I'm not saying no one in the oil industry makes a lot of money. Its just not the guys who run the service stations. Downstream is not where the money is.

Do you work in the industry?

I don't work in the industry. I'm a consumer.

killiank

The Dagda wrote: »

I don't work in the industry. I'm a consumer.

You're contradicting yourself now. You've already stated the website prices are not a "million miles" away from the price your customer pays you. Now you're saying something else. Which is it?

OK obviously you don't believe me & I'm not doing a good job of explaining myself here. Do you believe that that price on the website is the actual price per litre paid by the service stations including on that date? -21st Sep. The service stations I deal with paid a much higher price on the day in question. That I know 100%. Why on earth would they pay significantly higher than a known quoted wholesale price. I also know when I take off the service stations rebate from the price on the website & then add VAT @23% I get pretty close to what the service stations actually paid as per the invoice they received from the Oil Companies. The actual price charged to the service station may also need to factor in quantity discounts also & hence why it might not match 100%.

The Dagda

killiank wrote: »

OK obviously you don't believe me & I'm not doing a good job of explaining myself here. Do you believe that that price on the website is the actual price per litre paid by the service stations including on that date? -21st Sep. The service stations I deal with paid a much higher price on the day in question. That I know 100%. Why on earth would they pay significantly higher than a known quoted wholesale price. I also know when I take off the service stations rebate from the price on the website & then add VAT @23% I get pretty close to what the service stations actually paid as per the invoice they received from the Oil Companies. The actual price charged to the service station may also need to factor in quantity discounts also & hence why it might not match 100%.

Do I believe the prices on the website? Yes.

Why do I believe them? Because there as good an indicator as any other I have access to, and because you've stated the following;

killiank wrote: »

I also know when I take off the service stations rebate from the price on the website & then add VAT @23% I get pretty close to what the service stations actually paid as per the invoice they received from the Oil Companies

You're actually implying that the prices are lower than the prices on the website; website price - rebate + 23% = service station price. So it's a bit confusing.

killiank

The Dagda wrote: »

Do I believe the prices on the website? Yes.

Why do I believe them? Because there as good an indicator as any other I have access to, and because you've stated the following;



"You're actually implying that the prices are lower than the prices on the website; website price - rebate + 23% = service station price. So it's a bit confusing.

"

There is no doubt it is confusing. Its probably intentionally confusing. Oil companies & service stations dont want the general public knowing what the actual cost of product is.

Here is a worked example (with different rebate & invoice prices) :

Schedule price from Texaco €1.3754 as per www.forecourt.ie
Service Station has rebate from Texaco of 15.5cent per Litre

So take rebate from Schedule price (€1.3754-0.155) & you get €1.2199.
Add the VAT@23% to this (€1.2199 x 1.23) = €1.5004.

Service station gets an invoice from Texaco for
18,000 litres @ €1.2199 = €21,958.20
Vat @ 23% = €5,050.38
Total Cost = €27,008.58

So the total including VAT is €27,008.58. This is what the service station gets invoiced. i.e. what it costs the service station. Divide this total cost by 18,000 to get cost per litre of €1.556.

So the actual cost per litre to the Service Station is €1.556 including VAT & NOT €1.3754 as per the website.

You're actually implying that the prices are lower than the prices on the website; website price - rebate + 23% = service station price. So it's a bit confusing.[/QUOTE]

Yes if you were to believe me that the figure on the website does not include VAT then yes it is actually lower. Schedule prices only mean something when you know what rebates companies get from the schedule. The rebates tend to stay the same so if you were to track the schedule price over time you would be able to tell if your local service station was jacking up the prices just to make a few bob or whether or not their cost prices has actually risen.

At the end of the day I dont know 100% where the website got its figures from. By working back from an invoice it looks to be the schedule price. I just felt the need to point out that is not the cost price that the service station actually pays.

The Dagda

killiank wrote: »

"[/I][/U][/B]

There is no doubt it is confusing. Its probably intentionally confusing. Oil companies & service stations dont want the general public knowing what the actual cost of product is.

Here is a worked example (with different rebate & invoice prices) :

Schedule price from Texaco €1.3754 as per www.forecourt.ie
Service Station has rebate from Texaco of 15.5cent per Litre

So take rebate from Schedule price (€1.3754-0.155) & you get €1.2199.
Add the VAT@23% to this (€1.2199 x 1.23) = €1.5004.

Service station gets an invoice from Texaco for
18,000 litres @ €1.2199 = €21,958.20
Vat @ 23% = €5,050.38
Total Cost = €27,008.58

So the total including VAT is €27,008.58. This is what the service station gets invoiced. i.e. what it costs the service station. Divide this total cost by 18,000 to get cost per litre of €1.556.

So the actual cost per litre to the Service Station is €1.556 including VAT & NOT €1.3754 as per the website.

You're actually implying that the prices are lower than the prices on the website; website price - rebate + 23% = service station price. So it's a bit confusing.

Yes if you were to believe me that the figure on the website does not include VAT then yes it is actually lower. Schedule prices only mean something when you know what rebates companies get from the schedule. The rebates tend to stay the same so if you were to track the schedule price over time you would be able to tell if your local service station was jacking up the prices just to make a few bob or whether or not their cost prices has actually risen.

At the end of the day I dont know 100% where the website got its figures from. By working back from an invoice it looks to be the schedule price. I just felt the need to point out that is not the cost price that the service station actually pays.

Does everyone in the fuel station business get a rebate, rather than just a flat price?

Do you know why the fuel companies use the rebate system?

Bandara

testicle wrote: »

My reading of "quoted wholesale + VAT" is that the quoted prices include VAT.

It doesn't

It means + VAT as in VAT has to be added. Wholesale fuel pricing NEVER EVER includes Vat.

Killiank is completely spot on with everything he/she says. With the exception of the delivery charge, I pay none for example.




Note: I sell fuel for below cost, its my rebate that brings the cost vs. retail back into line (by few cents)

opmb

Hammertime I sent you a private message did you get it? Can you help me out with this?

killiank

Thanks hammertime. I was fairly confident I was right but nice to get some qualified back up.

VINCWM

I'm still amazed by the amount of petrol stations that exist in Ireland.

I guess the trick is to have a great location (can't see you making a profit in a small town) and try to keep your
fuel prices as low as you can. If you're a cent or two below competition, people will automatically choose your station to refill and most likely pick up some other bits and pieces in your store. Above all, it's your store/deli that needs to look fresh (no one likes buying a
sandwich in a dirty shop) and have something special in there that appeals to the locals. Give them a reason to go to YOU.

LiamACA

opmb wrote: »

mikemac1 : I would be mainly concentrating on the retail end of things instead of the pumps as I understand there is really not much at all to be made in Petrol or Diesel. I would compare the shop to a small centra in size. There is already air and water on site I would have to see about getting one of those devices fitted because they are pretty close to the entrance of the forecourt and could get damaged if not put back properly.

but43r : You would be surprised with home heating oil, out of 1000 litres after paying your driver and expenses there is only around €30 profit its a very tight game and it really is strictly cash on delivery these days because you just can't take that risk anymore. I am thinking I would make 0.03c per litre at the pumps after credit card expenses, electricity and maintenance for the pumps. I believe the shop would do well the only thing is the town has been bypassed but there is still a large volume of traffic that goes through the town.

Does anyone have any ideas what would the profit margin be in the shop?

If your GP is < 25% you're in massive trouble, need to have wages at c.11% or same for that. The issue you must consider is whether or not you are going to join up with a Musgraves (Centra) or BWG (Spar). Clearly there are benefits to your purchasing power with these but they charge you a good portion of you sales figure (not net position) which could be as high a 5-6% and they are pretty in your face. You can lose it fairly quickly if they think you are not up to snuff

Dj320

opmb wrote: »

I was thinking of renting a petrol station. My father is big in delivering home heating oil and supplying DERV (Diesel) down in County Kildare but doesn't have any experience with petrol stations or the retail end of a petrol station. Can anyone help me with profit margins etc... I am looking at a petrol station to rent down in Laois. The shop is fully fitted out with deli counter etc... I just have to stock it and the rent is €1600 P/M I think it would be a great starter to introduce me to the game and potentially to expand the home heating oil business down to that area. Any advice at all would be greatly appreciated. Thank you

Hi opmb
I've recently opened an old filling station ( leasing ) I have planning permission in for a new build on a different site as I am happy with my sales where I am leasing but cannot improve the site due to its layout hence the new build.
Few points to look out for
Is there many other stations in the area?
Why did the last owner leave?
Your life will not be the same, you will marry the place 7days a week, 14hr days, you simply cannot afford or trust anyone to do it!
Take Into account , selling 20000ltr a week @ 4c per ltr profit, any less and it's not worth it, bank charges on lazer card transactions and other bank charges will roughly work out at 100 euro per week, VAT roughly 100per week, I only say these two as people can forget to factor them in and they are signifigent costs.
Drive offs are another factor nowadays so allow for this
Now a huge factor I have found out is YOU WILL NOT receive the full amount back for the amount you bought in ( losses due to temputure on delivery, evaporation) these are fairly signifigent ( I've lost 500 ltrs of petrol in 6 weeks due to this) .
Money is tight in this so I'm just warning you as I grew up in a filling station all my life but in saying that the money is always there every week provided your doing well, and DO NOT GIVE CREDIT.

CLASSICWASH

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