Gas Stations: Your Shortcut to Wealth? ⛽️

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Welcome Back!

You asked, we answered! In our last edition, we asked you to vote on which industry you wanted to explore next, and the gas station industry stole the spotlight. ⛽💸

Whether it’s a bustling urban service station or a rural roadside refueler, this sector is as necessary as your morning coffee—and it might just be your next investment opportunity. With the global shift in energy dynamics, gas stations are evolving into complex convenience hubs, making them a fascinating industry to explore for prospective buyers.

INDUSTRY BREAKDOWN

Gas Stations in North America: Fueled for Success? 🚗💨

The gas station industry in both the U.S. and Canada is massive, with the U.S. market alone valued at around $611.7 billion in 2024. Across North America, this industry includes a variety of business models—from stand-alone fuel pumps to full-service convenience stores with snacks, car washes, and even quick meals. In Canada, the market continues to be a solid performer, contributing around $35.8 billion CAD annually. Both markets are deeply interconnected, with similar competitive landscapes dominated by big names like Shell, ExxonMobil, and Chevron.

While Canada has around 11,934 gas stations catering to a more spread-out population, the U.S. boasts a denser network of fuel stations, particularly in metro areas. Despite this difference, both countries face the same emerging trends and challenges in the energy transition. 

Industry Trends

One of the most significant trends in the gas station industry is the pivot toward sustainability. As electric vehicles (EVs) gain traction, stations are starting to offer EV charging points alongside traditional fuel. This shift is driven by increasing environmental regulations and consumer demand for greener options. Major players are integrating this service to future-proof their stations.

On the flip side, the convenience factor remains king. 👑 Gas stations are becoming multi-service stops where customers can grab snacks, pick up essentials, and even have a quick meal. The rise of contactless payments and app-based loyalty programs are also revolutionising how customers interact with these stations, providing a more seamless and tech-savvy experience.

However, the volatility of fuel prices and global supply chain disruptions continue to impact profitability. This is an industry that ebbs and flows with global oil prices, so while the profits can be robust, they are often unpredictable.​ 

The Finances

What is fueling the bottom line? For a prospective buyer, gas stations offer a steady, albeit sometimes unpredictable, revenue stream. In the U.S., gas stations with convenience stores generate significant income from non-fuel sales, with gross revenues often surpassing $1.5 million annually. On average, gas stations in both Canada and the U.S. operate on slim margins, particularly on fuel sales. However, convenience items and additional services like car washes can significantly boost profitability.

A typical station can expect profit margins of around 1.5% to 3% on fuel sales, but higher margins of 15% to 30% on items sold inside the store. Start-up costs vary depending on location and size but expect significant investments in fuel storage, technology, and environmental compliance measures​.

Buy or Bust?

If you're thinking of investing in the gas station industry, now might be the time to fuel up on this opportunity. With a strong foundation in both Canada and the U.S., the sector is adapting to the modern consumer's needs—whether through convenience store sales or adding EV charging stations. While fuel margins remain tight, diversification through additional services offers promising returns. The market shows resilience even in volatile times, but you'll need to be ready for ongoing changes in energy consumption and price fluctuations.⛽✨

Check out these Gas Stations for sale:

Interested in a particular industry? Reply to this email with the industry you are curious about and keep your eyes peeled in upcoming issues. 👀 

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At Village Wellth, we assist buyers in determining the right financial fit. We work with you to identify the size of companies you can pursue, considering your personal financial needs, risk tolerance, and available capital. Our goal is to ensure your target company can cover your salary, debt payments, and generate additional cash flow for growth.

DEAL REVIEW

Established and Well-Branded Gas Station

This week’s deal is a multi-location gas station and convenience store located in NorthEast Ohio. 

Deal Facts 🔥

Green Flags 🟢

  • Multi-Revenue Streams: This business benefits from multiple income sources, including fuel sales, convenience store products, Ohio Lottery, and U-Haul rentals, which help diversify revenue and reduce dependence on any one stream.

  • Essential Industry: Operating within the gasoline station and convenience store sector, this business benefits from consistent demand for essential products and services, making it relatively recession-resistant.

  • Strategic Location: Situated on a heavily trafficked street in NorthEast Ohio, the business enjoys strong visibility and high customer accessibility, both of which are crucial for sustaining and growing sales.

  • Turnkey Operation: The property is well-maintained with newer parking lots and gas pumps, allowing a new owner to step in without significant immediate investments in infrastructure or upgrades.

  • Expansion Opportunities: With additional space for auto repairs or expanded offerings, there is considerable room for the new owner to grow the business by adding new services or increasing the store’s inventory.

Red Flags 🔴

  • Limited Growth in Revenue: Despite being operational for a decade, the gas station’s weighted revenue and SDE figures suggest that growth may have plateaued, requiring new strategies to drive significant increases.

  • Dependence on Owners: The current owners' involvement as stylists may indicate that the business relies heavily on their personal client relationships, posing a risk if they eventually decide to leave.

  • Small Inventory Value: The low inventory value of $3,000 could suggest that the business is not heavily invested in retail product sales, which could be a missed revenue opportunity.

  • Potential Market Saturation: The beauty industry in San Antonio is competitive, and without strong differentiation or expansion efforts, the salon could struggle to grow its market share.

  • Time Constraints of Current Owners: The reason for selling due to time constraints might imply that the business requires more attention or management than the current owners can provide, which could be challenging for new owners if similar time constraints exist.

Possible deal structure:

Watch Our Video Breakdown

For a more in-depth analysis, check out this video deep dive of the deal by our Founder, Morgan Tate:

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Want to learn more about this deal? Reply to this email with a “send me more details” and we will connect you with the broker!

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We could not agree more! 😎 

Why reinvent the wheel when you can buy it? Acquiring a small business isn’t just a transaction—it’s a lifestyle transformation. It’s your shortcut to financial freedom, where you get to skip the startup struggles and dive straight into growth. 📈 Think about it: instead of building something from the ground up, you’re stepping into an opportunity with established customers, revenue, and systems in place.

GOOD READS

Recommended Resources 📚

Below is a list of articles, books, and other resource we recommend for buyers or operators of small businesses!

  1. After weeks/months/years of searching, you finally found a business you are ready to buy! So now what? Check out this article on how to write an offer on a business.

  2. Ryan Reynolds, Kendal Jenner, Snoop Dogg, and now Beyonce - what do all of these celebrities have in common? They all have liquor brands. But why is liquor such a popular avenue for celebrities? Check out this article to see what the boom is all about.

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