New numbers show crunch for convenience store operators

The report came out a day after the Energy Information Administration predicted gas prices would peak at a national average of $2.87 per gallon in May, with the summer average pegged at $2.81 per gallon.

According to NACS, convenience store revenues increased 15 percent from 2005, spurred by a 17.9 percent increase in fuel sales to $405.8 billion. However, NACS also reported a 23.5 percent decline in industry profits.

The declining profits are attributable primarily to higher credit card fees and consumer price sensitivity.

More consumers are using credit cards to pay for gas and other convenience store items, but that costs store operators a roughly 3 percent fee per transaction. In 2006, credit card fees increased 22 percent to $6.6 billion, according to NACS.

Also, as crude oil prices climb, convenience store operators cut markup at the pumps in order to keep customers filling up. Motor fuel gross margins fell 1.7 cents to 14.7 cents per gallon, a 5.7 percent decrease from 2005 and the lowest level since 1983, according to NACS.

“Gas is almost a necessary evil that we all live on to drive customers into our stores,” said Tom Cook, director of operations for Springfield-based Cody’s Convenience Stores.

See SBJ’s April 23 issue for more on the NACS report and how local convenience store owners are reacting to increasing gas prices.