24hr self-service petrol station

alfaromeo84

Anybody here run one of these pumps. I was offered first refusal on a site which was formerly a petrol station. Closed a number of years ago due to a death, family had no interest in continuing it.

I was thinking that fitting self-service pumps might be an option, city suburb area, with high density housing.

Bandara

Yes I've a lot of experience in this industry

What do you need to know ?

alfaromeo84

I am not sure what I need to know really, but I do know this small station had a small shop, with pumps. The shop struggled when a good convenience store opened about 500yrds away, owner then died, and the place shut.

It will need new pumps installed, tanks are still there, but may/will require refurb at minimum, worst is replacement.

I have seen self-service pumps elsewhere, which seem to go well, most people are happy to use them these days.

What I guess I am asking is, is going this way viable, and what costs are likely to be incurred for installing a self-service system.

irishgeo

alfaromeo84 wrote: »

I am not sure what I need to know really, but I do know this small station had a small shop, with pumps. The shop struggled when a good convenience store opened about 500yrds away, owner then died, and the place shut.

It will need new pumps installed, tanks are still there, but may/will require refurb at minimum, worst is replacement.

I have seen self-service pumps elsewhere, which seem to go well, most people are happy to use them these days.

What I guess I am asking is, is going this way viable, and what costs are likely to be incurred for installing a self-service system.

You can't sell petrol without a person present for fire safety reasons.

alfaromeo84

You could be right, but how do these places operate so, with nobody present, I know several. Unless it's just diesel they sell, maybe?

drunkmonkey

Is it worth taking to Great Gas, are you able to finance the set up costs. I'd say margins are very tight and staff will be required.
You say there's a shop 500yrds away, I presume the retail side of the business is where a lot of profits come from these days not the actual gas itself.

alfaromeo84

I should say, that I have no intention of opening the shop, this is simply an idea of leaving it be fuel only, self-service/pay by card.

drunkmonkey

I'm not sure of the margins but I'd guess it's sub 3% on fuel. Card transactions could cost you 2%. That's leaving you with 1% gross profit on the fuel.
Based on selling 300,000 liters a month your gross profit is €3000 (that's 167 cars taking a full tank every day based on a 60 litre fuel tank).
As a business model it can't work.
Margin changes everything, do you know what roughly it is on fuel?

Gloomtastic!

irishgeo wrote: »

You can't sell petrol without a person present for fire safety reasons.

I've used a self-service regularly for the last couple of years and I've never seen anyone working there.

kingtut

Gloomtastic! wrote: »

I've used a self-service regularly for the last couple of years and I've never seen anyone working there.

Same here

drunkmonkey

There monitored from a central company owned location with a response team as far as I know.

Bandara

irishgeo wrote: »

You can't sell petrol without a person present for fire safety reasons.

That is not correct

alfaromeo84

Bandara, you say you have experience in this field, I'd be interested to hear your take on this.

DubTony

Bandara has years of experience but you need to ask questions or at least give some info about the property so he can give you definitive answers.

Have you considered opening the shop? Sub-letting/leasing? How big is the site? How big is the shop building? How many pumps are there?
What's the location? (If you've first refusal you shouldn't worry about anyone else jumping on it).
The self-serve/pay at pump operation is fine if you've multiple locations selling millions of litres of fuel (and a big chunk of investment cash behind you). The margin on fuel is too small to warrant big investment without the means to get it back e.g. a busy shop.

The Applegreen people will tell you that they're not in the fuel business. They're in the c-store business. The Canadian crowd that recently bought Topaz/Esso will say the same. There's no money in fuel unless you've a super location where you can make a decent amount per litre and still sell huge volume. Texaco Spawell and Texaco Lucan are great examples. And those sites generate huge revenue in well run shops.

Bandara

Hi,

I'm not really sure what your looking for info wise so I'll just give a rough outline of costs and potential issues and we can go from there.

The problem with reopening an old site (you don't mention how old but I'm assuming 10 years or so), the problem is you have zero idea whats under the ground. By that I mean what level of pollution is there underground, You could have leaded fuel from the pre-1999 old days (i.e. pre-unleaded), or leakage/contamination from old fuel tanks that are either sitting idle underground, or even worse, really old tanks where the old method used to be fill them up with concrete when you are finished with them ! The old tanks were metal so corrosion, leakage, tanks splitting over long periods of time where horrendous continuation issues.

I'm presuming you don't have plans of whats under the ground in the form of old tanks, tanks out of use etc. So your talking money to find that out. Then your going to need to pay to have soil samples done from multiple points on the forecourt, that could involve drilling permanent 'sample wells' where the council can insist that you provide them with soil samples/water samples on a regular basis to ensure nothing untoward is happening. If they show up contamination you may be obliged to inform the council and then your really in the ****. You need to fully understand the water tables in the area, what effect contamination could, would or indeed is having.

Let say you figure out what is actually under the ground, and that you establish the levels of contamination there, you can then agree that benchmark with the council as a legacy issue and upon you leaving the site in the future you can simply have the benchmarks retested and once the situation has not deteriorated further your in the clear. BUT, going back to the old tanks issue, it highly likely they would insist that you dig and remove these from the ground on dispose of the highly toxic waste via the correct channels, this is insanely expensive. I have direct experience of this in a site I operated. There was leaded fuel tanks from the 1980s that had been filled with concrete and abandoned 10ft underground. Local building and development caused the water tables to rise and the previously dormant contamination became an issue, i.e. there was leaded fuel reside going directly into the water table. Lets just say the council (understandably) went screaming mental and threatened to shut the site instantly. The total cost to rectify the issue was approx €600,000. Yep, six hundred grand.

Moving on, lets say there are no such issues.

Your going to need to replace all the pumps, new legislation around the issuing of the Fuel Traders Licenses will pretty much require new pumps as considerably old ones won't do. A good pump is approx €7000, and the additional tech to have it operate as self service is €1500 per pump. Lets say you have three pumps thats 26k or so, then you need a Doms box, this is the bit of kit that controls the pumps, the 'computer' if you will, these run into several thousand euro. Your also going to need new tanks, Im afraid I don't know the cost of these but I'd suggest your going to need 3 or 4 x 20,000 litre ones. Then you going to most likely need to upgrade the Fire Safety standards and install things like a remote kill switch etc for the fire brigade if there isn't one there. Then your CCTV is going to need to be HD with dome and night camera functionality, and you'll need one per pump, thats 6, you need to cover your entrance, exit, as well as a few general forecourt views, so your into a 12-16 cam system, thats another 6-10k depending on what you go for.

Car wash, these are very profitable and an important addition, you can sell and operate these remotely via a Codex unit. A decent refurbished carwash will set you back a minimum of 35k,yearly maintenance contract is about 6k. But its a huge money maker for a site. Average wash is costing you €1.50, your retailing it for €8, and even an average site will sell €25k washes a year. So its 8k+ profit and you'll own the wash in five years, your free-rolling after that as a wash will last you 10-12 years if you take care of it, only cost will be new brushes every 5 years for about 2k.

There is no issue selling UNL in an unmanned site once there is a remote monitoring hub supervising the operation at all times. There are several companies offering this service on an outsourced basis. The relevant statue is here http://www.irishstatutebook.ie/eli/1979/si/311/made/en/print and the sections that cover this in detail are 45 and 46. Derv has very few such restrictions. Your only potential issues would be around fuel delivery, you will require an onsite hut, with safety/fire equipment, a working telephone and a secure location to leave the required documentation (namely a document called a Schedule 4).

Margin wise this depends on the quantities you do obviously. Someone previously mentioned 300k litres a month. Your not going to do this unless you have a very strong location. And if you do do these numbers I'd suggest reopening that shop. I wouldn't be afraid of the local new store. Forecourts are killing traditional convenience stores as parking is not an issue in a forecourt whereas c-stores usually have parking issues. And everyone drives there days. C-stores are in declines past years whereas forecourts are the growth area. You see all the incredible spec €3 million fit out new build Applegreens, Maxols etc, yet you don't see and similar spec new greenfield c-store sites opening anywhere. As I said, forecourts are killing them. If you were to do 300k litres a month in a heavily housing area I'd be thinking of a store doing along the lines of 25k - 30k ex-vat ex agency. In simple terms (and this is very very rudimentary), your store alone would be making a profit of 40k a year. That coupled with 3.5m litres of sales and decent car wash would see the business showing a solid 120k profit, and I have allowed you a repayment capacity of 60k a year for five years to finance the required upgrades and improvements you would need to get the store and forecourt up to standard, so your still going to be showing 120k a year after paying that. (again this is off the top of my head and down to various assumed factors, but I wouldn't be too far out I feel).

Ok, fuel wise you can assume you'll operate off a 5-6c a litre margin, credit/debit card costs will eat up about .7 of a cent of that. Pumps all have temp comp these days but your still going to lose 300-400 litres a month across the site. Maintenance contract for a forecourt of 3 pumps and a Doms box is about 4k a year. Insurance isn't actually as bad as you'd think, assuming your carrying 80,000 litres max I'd venture insurance would be in the region of 3-4k a year.

Polesign, branding, stanchions etc you can get financed by a fuel company. Essentially you sign up to them for a period, usually 5 years and they will make a contribution to brand the site in their livery. Applegreen are desperately trying to tie up dealer owned sites at the moment and I've heard of very average sites getting handed €40,000+ to rebrand. The deal is you buy fuel exclusively off them and in return they write the 40k off over a period of 5 years. If you break the deal before the 5 years is up they usually have the contract written up so they can come after you for the full 40k back. So be warned !

So in summary,

If your site is in a very strong location opening it with a shop is the way to go. I get from your posts that this isn't your cup of tea. Thats fine, still revamp the site, put a shop in and rent it to an operator where you take 7% of his shop turnover and 2c per litre of his fuel sales and 40% of his car wash revenue, or just go the flat rent model - forecourts can be odd though, sometimes a cracking site just doesn't do the business, and an average one performs way above its weight. You get the kick back from Applegreen to help you rebrand, and you sign up with BWG or Musgraves and they'll contribute towards the store fit out, a normal small to medium store could expect to get a 60k contribution from the shop supplier over 5 years (this is a rough but educated guess figure). You get your shop operator to get a personal guarantee underwritten by his bank for 12 months rent in the event of him not paying your covered. Give a 3 year contract with a break after year 1, you'll know after one year regardless. And even if it isn;t working out for the shop operator you now have a up and running store that you can sell to the Applegreens, and KSmarts and leave with a handsome profit.

Up there for thinking, down their for dancing

Hope thats of some help, I know its a bit of a stream of consciousness but I'm just typing as I'm thinking as it now bedtime !

Any questions just shout.

pedroeibar1

Great post! Worth much more than a simple 'thanks' at the footer!

alfaromeo84

Bandara, thank you for that, certainly gave me great insight.

You are right about the shop, I didn't consider that it should be there as I have a full time job, and felt I personally would not be able to devote the time to that end of things, this is all new to me.

I am going to speak with the owners, to check how long the tanks are there, I do know they were operating until about 4yrs ago.

I may be back to you again, but thanks for taking the time to respond.

pedrodalkey

I resisted my urge to come back to congratulate/praise Bandara on his post but it did move me to set up a new account (even against my firm belief, that without major reform, this forum is in the final deaththroes). The DIT lad did me in, in the end. I am yet again undone!

tacofries

Bandara, out of interest how many years experience do you have in the industry?

That was by far the most informative and insightful post that I have ever seen on any forum, and although the sector that I am trying to get into is totally unrelated, your comments have really emphasised the need to start right at the grass roots of any business and then proceed by exploring every possible avenue.

Great post, great eye opener. Thanks a lot Bandara!

alfaromeo84

O.P. here, just to update, I went through the process of getting tanks checked, checking council licences, also checked with EPA etc, only to be told by the owners of the station that they were going with an offer from Applegreen, who recently opened the site with a small shop, I will say the place looks really well.

Obvious disappointment with the owners as I know them, but I guess they saw a bigger long term thing with a big player.

onedmc

So what Bandara is really saying is that you should set up an automated carwash only business