Originally Posted by
Rich Engelhardt
The three stations a half mile from me is selling 87 octane for $3.55 a gallon.
Meanwhile, the Get Go station that's 4 miles away is selling 87 octane for $3.19 a gallon when I swipe my "loyalty" (yeah right! ) card and get a $.03 a gallon discount.
You Get-Go is looking for foot-traffic volume in the store. And volume at the pump. Big margins in the store. Also - at the pump it is an issue of variable v. fixed costs.
The infrastructure is a fixed cost - concrete, computers, pumps, etc. The marginal cost of the next gallon sold is a different duck. They can structure their bs model to have the store side carry the weight of the entire physical plant, and then the pricing at the pump becomes a very thin margin deal - designed to sell more fountain drinks, Marlboros, and beef jerky.
OTOH - within 1/2 mile of me are 2 gas stations on Peachtree Street. Yes - THAT Peachtree street, in Atlanta. No other gas station on that road for many miles in either direction - I bet at least 5 miles either way. Their prices are competitive with each other.
However, off Peachtree, 4 - 5 miles away, are 3 stations staring at each other across an intersection. Their prices are a penny or so different, and all are 25 cents less - maybe more - than the 2 on Peachtree Street.
Rent on Peachtree is probably staggering. There are no other stations nearby. Gonna run 5 miles for 10 - 15 gallons cheaper? Many of us would. Many people are in a rush and don't.
Real estate rules 1 through 3: Locaiton. Location. Location.
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