Buying a petrol station?

[Nish]

Hi Guys,

Wondering if anyone on here owns or has looked into purchasing a petrol station?

Bearing in mind I know nothing about this any help/advice/views would be appreciated.

Taking this an example:

http://www.christie.com/search/full/6/38276?127072...

At a glance it seems a sound investment (obviously assuming all figures etc check out)?

[Odie]

I used to run a petrol station (I didnt own it) and their was no money in it at all, unless you can provide some other services or do alot of related sales.

Considering the amount of money you have to lay down in order to fill up the tanks I would say avoid a petrol station and get a corner shop/sandwich shop/deli instead.

Edited by Odie on Thursday 8th April 13:40

[itsnotarace]

Odie said:

I used to run a petrol station (I didnt own it) and their was no money in it at all, unless you can provide some other services or do alot of related sales.

All the profits are to be had on impulse purchases in the shop itself, unless you are so far away from every other filling station that you can corner the market and charge what you like for fuel. If you have to compete with supermarket prices then you will probably not break even

[Nish]

Odie said:

get a corner shop/sandwich shop/deli instead.

Edited by Odie on Thursday 8th April 13:40

Oi! Just cos I am a Patel doesn't mean I need to have a corner shop!

I understand the margins on the petrol itself are low, sales coming from other bumpf etc. But the figures from numerous adverts seem to show healthy profits?

I do not intend to give up my day job, this would just be something managed/run by someone else earning me a few extra quid.

[itsnotarace]

Get a McDonalds franchise then

[HiRich]

An old friend has made and lost a fortune running petrol stations. As mentioned supermarkets (now or any future possibility) are a major problem - lots of interesting stories about their business practices.
Like the supermarkets, you would need to consider the petrol side as a loss leader, cash provider. Your profit is going to be in related activities:
- Corner shop
- Dealership
- Service station & MOT Centre
- Agricultural machinery
- Or some other facility (chandlery, baitshop, etc.)
I think there is still a lot of potential for an independent service station with high visibility and a high standard of service. Build a reputation around the village as the place for everything and go from there. But is that something you want to do?

[Nish]

To be honest, no.

I don't want to make a career out of it and won't have that much time to put into it in all honesty.

Ideally I am looking for a station where I can purchase the lease or freehold and it continues trading exactly as before.

So basically a managed business where the owner is perhaps retiring or looking to cash in.

Going back to the advert linked above and what has been said here re profits, if I got my accountant to go over the figures would it turn out to be make believe?

I obviously find the figures a little hard to believe but wouldn't imagine they would be a million miles off either.

[Trommel]

Nish said:

if I got my accountant to go over the figures would it turn out to be make believe?

Same as with anything else - you're not going to get as far as financial due diligence without agreeing a price so there's a lot of effort involved in finding out.

[SJobson]

Bear in mind that you're also taking on a potentially contaminated site, and if you keep running it as a petrol station, you will certainly be liable for any clean-up.

[Nish]

SJobson said:

Bear in mind that you're also taking on a potentially contaminated site, and if you keep running it as a petrol station, you will certainly be liable for any clean-up.

Could this not be mitigated (and this is a wild guess) by buying a lease instead of freehold?

[Oi_Oi_Savaloy]

But then I'd expect a lease to be a bit like a tied-pub; you'd have to buy all your petrol etc from the freeholder and they'd probably take a cut of any other sales you make too?

I might be wrong on this of course.

[Deva Link]

The shop sales of £6500 seem astonishingly low. I worked in very quiet filling station where we actually served people (so they didn't even need to come into the kiosk) while I was at college (more than 30 years ago) and we sold £200/wk worth of sweets even then.

[amir_j]

Tip- make sure the location is good. A mate's uncle had a petrol station which was doing nothing more than OK. Was bought out for the land & demolished.

[tamore]

Deva Link said:

The shop sales of £6500 seem astonishingly low. I worked in very quiet filling station where we actually served people (so they didn't even need to come into the kiosk) while I was at college (more than 30 years ago) and we sold £200/wk worth of sweets even then.

'declared' sales possibly?

[Deva Link]

tamore said:

Deva Link said:

The shop sales of £6500 seem astonishingly low. I worked in very quiet filling station where we actually served people (so they didn't even need to come into the kiosk) while I was at college (more than 30 years ago) and we sold £200/wk worth of sweets even then.

'declared' sales possibly?

Ah.

[Nish]

The margin on fuel seems to circa 5p per litre.

So taking the ad above, 2.5 million litres will generate about 100k, staff costs say 60k.

So 40k a year just off the fuel? Not bad.

[amir_j]

What are the industry medium-long term view on alternative fuel effects on petrol stations?
How much investment will be needed and when?

in japan aren't there drive in stations where batterys are 'swapped' on electric cars? as instant rather than xhours charging.

[SJobson]

Nish said:

SJobson said:

Bear in mind that you're also taking on a potentially contaminated site, and if you keep running it as a petrol station, you will certainly be liable for any clean-up.

Could this not be mitigated (and this is a wild guess) by buying a lease instead of freehold?

You'd need specific advice, but the general principle is that the polluter pays. If you're taking over running an existing business, you're continuing the potentially contaminative use, so you're probably going to be the polluter, whether you hold a lease or freehold.

I don't think people consider this aspect of petrol stations in enough detail - generally developers buying to turn the site into flats will look into it, and Shell seems to have been replacing its underground tanks all over the place in the last few years, so it's certainly on the minds of some people.

[Odie]

Nish said:

The margin on fuel seems to circa 5p per litre.

So taking the ad above, 2.5 million litres will generate about 100k, staff costs say 60k.

So 40k a year just off the fuel? Not bad.

Back when I was doing it Margin on petrol was circa 0.05p - 0.1p per litre

[Maxf]

Nish said:

The margin on fuel seems to circa 5p per litre.

So taking the ad above, 2.5 million litres will generate about 100k, staff costs say 60k.

So 40k a year just off the fuel? Not bad.

Business rates, services, insurance etc...