Like any business, a gasoline station can be a good investment if well located and well-run, generating healthy profits. There is a future for service stations if fuel retailers adjust their model. Otherwise, the decline in fuel sales will render 45% to 60% of stations potentially unprofitable by 2035, pushing return on capital employed to low single digits.
Electric cars will lower gas prices. A 2018 University of Michigan study found electric vehicles cost less than half as much to operate as gas-powered cars.
Profitability Prospects
Are gas stations still profitable? Gas stations can be profitable if well located and well-run.
Stations generate revenue beyond fuel sales. They offer convenience items, automotive services, and food. Since people need gas, stations have stable revenue less affected by economics.
Stations are on prime real estate. Their value includes location. Profitability depends on location, fuel prices, and costs. Margins are often 1-2%. But volume and extra services can increase profits. So some stations do very well.
Investment Considerations
Before investing in a gas station, evaluate the land, potential success, and likely profits. Purchase prices range from hundreds of thousands to over a million.
Overall, gas stations can diversify an investment portfolio. With analysis and effort, they can provide steady cashflow. However, stations face risks like changing traffic patterns and environmental regulations. Hands-on management is essential.
Stations also offer convenience stores, car washes, snacks, and more. These additional services boost income. And vehicles always need fuel, so demand persists.
Still, startup costs are high for permits and inventory. And gas prices fluctuate, impacting profitability. So stations require research before investing.