The number of petrol stations in the UK has dropped in recent decades in line with lower fuel and diesel reserves being held across the country. A rise in the number of cars on the roads from 27 million to 35 million in the last 15 years indicates however that the demand for fuel is on the rise, and a well-run petrol station can be a profitable business. Supermarkets now control 15% of the UK’s petrol forecourts, whilst the major fuel companies and independent retailers capture the rest of the market.
Turnover and profit
Independent retailers have felt the pinch from the influence of oil companies and supermarkets. Many have to buy fuel from independent wholesalers and the cost of fuel added to the level of taxation on it means that profit margins on fuel are as little as 2 to 3p a litre. Supplying just petrol to a motorist paying by credit card means that the petrol station can lose money on the transaction due to card charges, and so it is vital that a petrol station has an attached shop where a retail operation can generate a decent profit. The average forecourt shop of over 50 m² now turns over close to £400,000 per year.
Shell Retail suggests that franchisees can expect to earn between £70,000 and £90,000 per year running a cluster of up to six sites. This is based on commission from all fuel sales and income from shop and car wash sales. Franchisees then have to pay an agreed royalties amount to Shell. Some of the most successful products sold in petrol stations include confectionery, tobacco, snacks, frozen foods and soft drinks
Opening hours of a petrol station have can have quite an impact on its income. In quieter areas, opening for 15 to 16 hours per day is advisable but in busier stations, 24 hour opening can be profitable despite higher staff costs, lighting costs and the fact that fewer cars are on the roads. Some petrol stations will even remain open 24 hours for security reasons.
Location is also important to a petrol station’s earnings. Main road locations with a sizeable shop can generate considerable turnover but shops that serve particular local needs such as providing a local shop for a small village can also be relatively lucrative.