Hacker News Reader

Comment by dunmalg | Hacker News Reader

> can a guy who owns a few dozen stores compete with chains that own hundreds?

With the exception of places like Costco and large truck stops, the vast overwhelming majority of gas stations are franchises where the owner is just some local guy selling under the Chevron or Shell or whatever name. This has some promotional value, of course, but the owner sets the prices just like any other station operator. Ultimately, they all buy fuel from the same local refineries or wholesalers, regardless of the name on the fuel truck that delivers it.

Standard Oil encountered some legal issues back in 1911 by using its size and vertical integration to undercut competitors at the retail level. As a result the petroleum production industry is now intentionally very much NOT involved in retail fuel sales.

View on HN

I admit to not having many actual statistics. I agree that most are franchises as you mention. But I strongly suspect that the percentage owned by major chains -- Wawa, Sheetz, Speedway, etc, is growing rapidly. 10 years from now, I believe the independent franchiser (under 10 stores) will be very rare.

Growth example: Wawa entered Florida in 2012, according to Wikipedia. In 2019 it already had 167 and they expect Florida to surpass both PA and NJ, their traditional base, in 2021. Pretty sure the vast majority of the FL stores have gas, while many PA/NJ do not. Further, the number of pumps is generally much higher at the big chains, so 1 of their stores may equal 2-3 independent franchise stores in terms of customer count or gas sold.

https://www.mcall.com/news/local/mc-nws-pa-wawa-expansion-20...

There are plenty of exceptions. WaWa has already been mentioned.

Sheetz has 600+ locations and does $8b a year. All corporate owned and operated.

>Sheetz has 600+ locations and does $8b a year. All corporate owned and operated

600+ seems like a big number until you consider that there are 168,000 gas stations in the US. Large chains have a LONG way to go until they are more than a statistical blip, and this doesn't even take into account the fact that the federal government has, for over a century, cast a very jaundiced eye at any single entity using its market presence to drive competitors out of the retail gasoline business via undercutting on prices. Looking at the FTC ruling on the acquisition of Sunoco's fuel retail locations by 7-11, they monitor competition in fuel retailing VERY closely, to the point of mandating a certain degree of competition in specific markets.

https://www.ftc.gov/news-events/press-releases/2018/03/ftc-a...

Undercutting on gas prices is hardly the point. Most well-known chains charge more for gas -- and get away with it because their stores are cleaner, more convenient, have more pumps (so less waiting), and a far better C-store experience.

The store side is primarily where chains threaten independent operators because they can have a lower cost structure overall -- much more purchasing power on food/snacks/soda, more ability to offer fresh food (Wawa sandwiches, Racetrac frozen yogurt, etc), better stocking, and far more labor efficiency.

Your own number of 168k gas stations proves the point -- that number is from 2004, and is 40,000 less than a decade earlier. While there are many reasons why gas stations are closing, surely increased competition from brand-name mega-stores with 16, 24+ pumps each -- is one of those reasons.

https://www.fueleconomy.gov/feg/quizzes/answerQuiz16.shtml

Reply on news.ycombinator.com