Opening up a Petrol Station

[commadus]

With the price of petrol and the way petrol stations are so slow in dropping the price this looks like a good business to go in to. Anyone run a petrol station can give me a heads up?

 

I used to do the books for a local petrol station, though it was quite some time ago.

The margin on petrol is quite small, and the trick is to get every customer to buy something else while they are there. Unfortunately petrol is only really a money spinner for the government and the large oil companies - the normal petrol retailer works on a small markup.

Location is vital to any petrol station, and decent access & parking is also vital if you want them to spend any time at all in the shop section.

 

[commadus]

So really a petrol station with a good shop is best? The money will be made from the shop not selling the petrol? What is the markup on the petrol?

 

[Gmorgan]

Almost every independent petrol station within 5 miles of my house has disappeared in the last few years and even some Texaco and Shell ones. I think the competition from the supermarkets is too great.

 

[creospace]

Supermarkets only sell cheap petrol to get you do do your shopping there - i assume for a supermarket it's a loss leader.

I understood that petrol stations themselves earn 1p per litre on the petrol.

 

[KidsBeeHappy]

Lots and lots of legislation re petrol, Trading standards & H&S re the tanks, pumps their condition, standards etc. They need licensing annually etc.

Margins are very very low.

 

[commadus]

So no one would suggest pumping £100k into buying a petrol station is a good investment? Its just that in America they seem to be good earners.

 

[KidsBeeHappy]

We bought a shop which had old petrol tanks with it. Trading standards gave us 7 days to fill & seal the tanks. The amount of legislation and the enforcement that goes with it is phenominal. I put £5k in a hole in the ground and it will bug me forever!!

 

[Rob3205]

One option you might consider is a petrol station that supplies biodiesel as well.

There is a grwoing demand for it, as prices are considerably cheaper than standard 'dino' diesel.

I used to work for a biofuel commodity broker, which went from a start up, to buyout in 7 months.

The problem we faced was that lots of business wanted biofuels, but so did the personal users. There are some bio filling stations around, so it depends where you are, but it may be worth looking at.

Particularly if you promote it on a biofuel website, there is a very good one, which I can't put a link to yet but if you look up vegetableoildiesel you will find loads of info on there. People will travel out of there wy to fill up with bio, which may attract them into your shop!

If you want more info, or any contacts, just drop me a message.

Rob

 

[sabian1982]

You do realise that its the governments fault as well... approximately £0.60 of each litre you buy goes to the government... of the people actually selling the petrol on the forecourts... they get around £0.06 profit per litre!

 

[commadus]

£0.06 per litre is not too bad. Thats like £1.50 on the average fill up. So why are people saying its not a profitable business?

 

[Rob3205]

Bear in mind that we were selling biodiesel at around 75ppl including duty and VAT!! it will have gone up now, but would still be well under the £1 plus that diesel is currently being sold at. If it was bought in bulk, for arguements sake, and was sold to the customers at 95 ppl thats 20ppl profit!! not bad going!

 

[commadus]

But dont cars need to be modified to run on biodiesel. I read that the biodiesel would eat away at the seals?

 

[sabian1982]

What biodiesel when its at home? slightly more eco friendly petrol? whats the difference? does it get you as far as normal diesel? what percentage use biodiesal? i don't own a car, (i have my own personal chauffeur) but i'd imagine if people don't know exactly what they are putting in their car, then they are unlikely to put it in it!

I might also add that us in the UK are already doing our part... its America that needs to sort its global saving policy(s) out!

 

[Rob3205]

Not at all

Most modern cars have higher density rubber seals, pipes etc. Older cars, pre 92 used to be a problem but the pipes can be replaced with modern more durable ones.

With regards to conversion, no. Biodiesel is a drop in replacement for diesel, you can run it blended with diesel, or on its own.

The RTFO coming in next year means that all fuel suppliers will have to supply a minimum 2.5% biodiesel in their diesel, moving to 5% then 10% by 2010 or 2012 I think it was.

If you look at the diesel pump at your local filling station, it will probably say EN590 on it, this means the fuel could already have up to 5% bio in it, it's just at present the fuel companies don't have to declare it.

The only thing you have to do is change the fuel filter after a couple of tank fulls, the only reason being the bio clears out all of the muck and deposits left by the diesel (it's filtered to a much higher degree).

Bio being oil based actually lubricates the engine, making it quiter, last longer, have lower emisions (upto 70% reduction on CO2) and can improve the MPG.

And it's cheaper too!!

The diesel engine (incidentally invented in the UK 6 years before Rudolf diesel patented his model) was originally designed to run on peanut oil, but the petrochem companies brought us diesel, and the rest is history!

 

[commadus]

So it seems that the risk and possibly rewards is to set up a petrol station that sell biodiesel and petrol. Would anyone risk selling biodiesel exclusively on a petrol forecourt?

 

[Rob3205]

Sabian

Bodiesel is a diesel replacement made from oil (usually rape seed, soya etc but can be used cooking oil that has been processed) mixed with caustic soda and methanol, in a process called transetserification.

The US and Europe are actually way ahead of us on this front. At present if we keep on like we are doing, and America keep on with the biofuels production/import (Biodiesel and Bioethanol) we will pro rata be one of the worlds highest polluting countries!!

Not good.

 

[Rob3205]

Commadus

I will try (you will have to excuse me as I have just recently joined) to send you a message with some links on.

They will show current filling stations that supply bio, plus another one which details a biofuel website, you may want to promote yourself on if you decide to go for it.

Regards

Rob

 

[commadus]

Thanks Rob.

 

[Rob3205]

Ok message sent

Have a look, and if you need any more info, and some supplier details, just let me know.

Rob

 

[Top Hat]

My dad used to run a petrol station years ago, when it was less competitive ad he closed it.

I think there are better businesses to start

 

[creospace]

I think anyone that gets into 'bio' this that or the other at the moment is goign to have a struggle but will be onto a good thing for the future.

Branson is forking out for the research for a bio aviation fuel, something that's not possible at the moment due to the low temperatures but if he cracks it then he's onto another winner - he's got his head screwed on the right way!

 

[akhtarkasia]

I used to own a very busy petrol station. Opened 24 hours a day.

Making money from the fuel is quiet easy and it is rewarding. On average there is atleast 4p a litre to be made. SO if you are doing anything over 5 million litres a year you have cracked it. Shop was the main money earner. Pack of crips for 50p, cigarette margins as high as 30-40% and drinks well anything over 150% markup.

This sounds great doesn't it? Well yes but the other main bit involved in this to make you money is money. i.e. investment.

Each tanker delivery will cost you in the region of nearly £30K. so if you were doing 5 million litres a year that is 3 tankers a week. £90k gone bfore you have opened your doors. Than there are credit card charges, security, staff training, legislation, red tapes and so on and on.

I ran the station for few years and my family life was affected badly. Forget holidays, and social life. In the end i sold the business and bought a stationery company in Dewsbury www.ink4u.co.uk I joined www.penNpaper.co.uk which i was already running and now have introduced another site www.office-furnitures.co.uk

This is all hard work but atleast i get home before 7 every day and weekends are off. I have more time to spend with my boys.

Owning petrol station is great but you do need a large amount of investment. There are certain companies like Jet, Texaco who will support you financially but to be honest you will have to speak to them direct and see what you can get out from them.

By the way when our famous petrol company ran a competition our station came 3rd for whole year out of 1800 stations. So i am kind of your expert.

If you need more info pm me.

Akhtar

 

[Grollsta]

I would be interested in a "refill station" to service LPG gas converted vehicles. in Australia, you have many petrol stations that have gas refill as well, which is great, most of their taxis run LPG there.

How popular is LPG here in the UK

 

[Rob3205]

The biodiesel thing is growing constantly, currently over 400 commercial producers in the UK, ranging from smaller producers sticking below the 2500 litre limit, up to the big boys, such as Greenergy, Argent, D1, Ebony Solutions, V-Fuels. Some of these guys are producing upto 300 Million litres per year.

As for LPG, all the alternative fuels are growing in popularity, however there don't seem to be a huge number of LPG filling stations as yet.

Bioethanol is another alternative, although you do need a vehicle capable of running on it. Saab now have their Bio-Power, and Ford have introduced a Focus to run on bioethanol. Again supply is the issue, there are only a couple of UK producers, such as Harvest Energy, although they do supply through some of the Morrisons filling stations.

 

[commadus]

So would I be better off in setting up my own bio diesel plant than buying a petrol station?

 

[Rob3205]

Well a lot of the biodiesel producers do run their own filling stations, as soon as local hauliers etc start hearing about a new producer, they seem to come knocking. Plus as mentioned individual users who are aware of biodiesel are always keen to find a new source, closer to home. I have heard of people doing a 70 mile round trip in order to fill up with bio!!

I also still have contacts within the industry who supply the biodiesel reactors/processors if you want to investigate that as a possible option.

 

[commadus]

Rob are you still in the Biodiesel business?

 

[Rob3205]

Not any more

I'm now the UK Sales Manager for a global certification body, we do ISO 9001/14001 assessments and certification, and provide business improvement solutions etc. The company name is SAI Global, if you want to check out the website, it's dot com.

I was in the biofuels industry until about 6 months ago, and it's still a passion of mine. I still maintain various contacts, and I'm currently working on a couple of projects in my new role that are related to the biofuels industry.

 

[AdamJ]

Almost every independent petrol station within 5 miles of my house has disappeared in the last few years and even some Texaco and Shell ones. I think the competition from the supermarkets is too great.

Although they are often blamed for most retail ills, I don't know if its Supermarkets which are solely to blame. We used to have a 45 mile round-trip to the nearest supermarket with a petrol station, yet still the local shell station closed, followed by another independent leaving just one. While I'm no expert, it seemed that the profit margin on fuel is just too low to make it worthwhile on its own.

 

[ADW]

Comadus - Given your inexperience of the Forecourt game I would strongly advise that you steer clear. You would be commiting financial suicide as it is a cut throat business and even the experienced are struggling against the big boys. Unless you are able to get hold of an established prime site you won't stand a chance and a decent site will cost atleast a million these days. The money that you make on each litre will probably cover your drive-offs. You can make money in the shop through the high footfall but you need a minimarket type shop with a branded fascia. Also expect to get called out in the middle of the night a couple of times a week when problems arise. Fun all the way. I can think of far better businesses to start with 100k.

Good luck!

 

[IP2]

I have no idea how common this is, and I have zero expertise in petrol stations, but an old friend who is a geologist (or something like that?!) was telling me how a client (a petrol station) was facing financial ruin after being forced to clear up from decades of leaking petrol from the tanks, from previous owners. Never heard the out come, but something I figure you need to check out if you follow this path.

 

[jumrose]

can anyone please help me to find out how i can get a petrol station franchise.As i am looking to run a petrol station and how much investment is needed and what is the procedure to go about getting a petrol station?please help