Service Stations

Even as gas stations move to sell more fast food and small essentials, traditional convenience stores are looking to sell more gasoline. About 60% of the nation’s 64,000 convenience stores now sell gasoline on the side, including between 80% and 85% of new stores, said Kerley LeBoeuf, president and chief executive of the National Assn. of Convenience Stores, based in Alexandria, Va. If it weren’t for regulations in some parts of the country that prevent the sale of gas and alcohol at the same location, all new convenience stores would sell gasoline, he said.

The wide, seasonal fluctuation of gasoline sales adds flair to steadier earnings from traditional quick-stop items. “The profitability of gasoline is cyclical, whereas the profitability of a candy bar is not cyclical,” said Robert A. Johnson, Western region gasoline market manager at Southland Corp., which owns the 7-Eleven chain.

The average 7-Eleven store selling gas in Southern California has six to eight hoses, while new stores average 12 hoses, Johnson said. Southland sold $1.72 billion worth of gasoline at 3,594 stores last year.

While some older Circle K stores have as few as two hoses, the newest stores have four pumps and 24 hoses, said Robert F. Burns, senior vice president for gasoline operations of the Phoenix-based convenience store chain. Gasoline accounted for about 35% of the chain’s sales last year, he said, up from 28% in 1980.

Sales by traditional convenience stores are vulnerable to competition from oil companies’ stations because such stores often occupy less visible land on secondary streets and in the middle of blocks on main arteries, said Thomas J. O’Brien, Shell’s manager of ventures, convenience stores and company-operated stations. “The oil company locations generally are better than convenience store real estate.”

GAS AND GOODIES

Convenience store--gas station combinations in Southern California (Bakersfield/Fresno to Mexican border):

Convenience Gas station Company store only only Combinations Arco 5 566 281 Chevron -- 562 68 Circle K 135 -- 154 Exxon -- 243 7 Mobil -- 810 90 Shell -- 600 100 Southland 720 -- 180 Texaco -- 762 69 Unocal -- 1,100 0

Source: Company statements