Service stations are filling bellies as well as tanks
In Woodland Hills, saleswoman Danielle LaRocca checked on her order: a chicken salad, dressing on the side, fried crunchy wonton noodles on the top. Over in Westwood, Laurie Tynan wanted a pulled-pork sandwich. In Santa Monica, paninis were on the grill.
Tasty food is nothing new in Los Angeles, a city where restaurants dot every block. But these made-to-order meals are being served up at gas stations, where cheap hot dogs and warmed-up pizza are starting to be replaced by freshly baked croissants for breakfast and Cobb salads for lunch.
Welcome to the evolving urban gas station.
The first filling stations began popping up in the United States around 1905. By the 1950s, most were places where workers pumped gas, mechanics fixed carburetors, and Coke and candy came from a vending machine. Then came self-service gas, carwashes and mini-markets.
Today, corner stations are increasingly looking more like restaurants, as slim profit margins on gasoline have forced owners to search for new ways to make money. Along with higher-quality food, some are even offering printed menus, home delivery and catering.
“The industry has faced a lot of changes over the past 10 to 15 years,” said Keith Reid, editor of the industry publication National Petroleum News. In California, the number of gas stations has dwindled 27% since 1996, his magazine reported, and the search is on for more sources of revenue.
“The more profit centers you can put on a piece of property the better,” Reid said.
And it’s not just a matter of selling better coffee in the convenience store.
“We’re changing from gas stations that happen to sell food, to restaurants that happen to sell gas,” said Jeff Lenard, spokesman for the National Assn. of Convenience Stores, whose members sell about 80% of the nation’s gasoline. It might seem strange to order a salad in a service station now, he said, but in 20 years, it will be commonplace.
Along interstate highways, drivers and rural residents have long patronized barbecue joints and burger stands inside gas stations. Motorists who have driven Tioga Pass Road to Yosemite tell friends about the food at the Whoa Nellie Deli at a Mobil station in Lee Vining. And in the eastern United States, a number of chains sell gasoline along with restaurant food at locations that are anchored by convenience stores.
Now better fare is coming to California’s urban areas, where station owners are finding that customers appreciate being able to get higher-end food while filling their tanks.
About 11% of Chevron Corp.’s 395 company-owned stations now have food operations inside, many of them operated by chains such as Subway or McDonald’s, spokeswoman Lori Carlisle said. Privately owned stations — those that carry the names of big oil companies but are owned by franchisees or entrepreneurs — have also embraced the concept. Many have gone beyond chain restaurants to add their own individualized delis and grills.
“This is, in so many ways, a natural evolution,” said Daniel Conway, spokesman for the California Restaurant Assn., pointing out that it was the car culture that spawned the fast-food industry. “If you’re going to have the kind of traffic associated with a gas station, you’d like to be able to tap into those customers to sell something else.”
Behind the trend is a stark financial reality, said Reid of National Petroleum News. While gasoline brings in the customers, selling fuel is highly competitive, and station owners typically make about four cents in profit for every gallon sold, he said.
For years, station owners augmented their profits by repairing cars. But space is scarce for the expensive computerized machines needed to service today’s complicated vehicles, and that business is also highly competitive. To stay in business, Reid said, station owners need to find a sideline — and are increasingly turning to food to fill the bill.
Richard Speckman’s Mobil gas station is near one of the nation’s busiest intersections, Santa Monica and Sepulveda boulevards, and surrounded by office buildings. Not only is gasoline less profitable for him these days, but his rent at that choice location has skyrocketed over the last decade.
To stay profitable, he has added a deli. It took a while to get going, as customers got used to the idea of buying food at a gas station, but now the deli is key to keeping his operation in the black, Speckman said.
On a good day, he said, the Corner Grill & Deli sells up to 700 orders. The bestseller in the morning is the breakfast burrito, which comes with eggs, cheese, the meat of your choice and a side order of potatoes and sells for $3.79.
The deli doesn’t come close to generating as much revenue as gasoline, which is selling for about $3 per gallon. But the food is considerably more profitable, accounting for 25% of the station’s income after expenses, Speckman said.
Bhupinder Mac, who owns 27 Chevron stations in Southern California, said that when he began running stations 30 years ago, most offered little beyond petroleum and mechanic services.
Slowly, he said, station owners added vending machines, small convenience stores and eventually franchise fast-food outlets. Three of his stations have fast-food franchises inside, and another three offer original items developed by Mac and his wife, Amarjit.
At their station at Warner Center in Woodland Hills, Mac demolished the service bays three years ago, replacing them with a new building that includes a Starbucks, a dry cleaner and a takeout counter that offers a full breakfast, salads and panini sandwiches.
“At first, nobody could believe there was a deli here,” Amarjit Mac said.
Over the last five years, revenue from made-to-order sandwiches at convenience stores — almost all of which sell gasoline — has increased 5% to 7%, said Tim Powell, an analyst with the Chicago food industry research firm Technomic. That’s a significant jump, Powell said, considering that the recession flattened revenues across the board for food service businesses.
But the business of making and selling freshly prepared food is different from running a gas station, and experts warn that not all will be successful. Locations must be scrupulously clean, they said, and the food has to be exceptional.
“You’ve got to blow them away,” said Speckman, the Mobil station owner, “or they won’t come back.”