If you have a vehicle, then you’ve got to fill up on gas at some point in time, right? The perception of the average gas station is that with high fuel prices, the station is actually making a fortune at the expense of each customer’s needs for fuel. The reality, however, is quite different because most margins on fuel are about 3%. At best, a gas station owner might see a 5% total margin. That means about a maximum of 15 cents per gallon is profit, or $3 out of a 20 gallon fill-up.
What if you could create an opportunity where you could pay your franchise costs through the fuel margins with no upfront fees coming out of your pocket? Would that be an amazing investment opportunity in your view? With Raceway gas stations, that’s exactly what you’ll receive if you enter into an agreement with them.
It’s a Contract More Than a Franchise Offer
Partner up with Raceway. What you’re really doing is becoming an independent contractor who is representing their fuel. You’re required to use their fuel only during the life of the agreement, but in return you can choose your own product vendors, run your own food program, and have as big or as little of a store that you want. The initial investment is estimated at $125k to get a brand new location up and running and the only contract stipulation outside of the fuel is that there are certain items of inventory that you cannot sell through your new store.
So why is this a good opportunity? You’ve got to go back to the margins. A lot of the money that a convenience store makes doesn’t come from the fuel it sells, but is instead on the food products and other inventory that is sold inside. Snacks, energy drinks, alcohol if you’re licensed, and tobacco products are where you can really start raking in the cash.
Here’s a look at some of the typical “inside” product margins you’ll find when you go inside after fueling up your vehicle:
• Tobacco, beer, and similar products: 15% – 25%
• Food products: 15% – 50%
• Counter items [lighters, toys, etc]: 25% – 90%
Or you could look at it this way. You could make $3 off of a full tank of gas and you could make that same $3 if the customer purchases a couple bags of chips from within your store. The goal for the Raceway contractor is to lure their customers who are purchasing fuel into their store to purchase more items. That’s how money can be made.
Considering the average contractor only needs about $50k in capital at any given time under this business model, it’s a low cost way to invest in the future. Keep costs low, expenses tight, and one could make a comfortable living owning a Raceway gas station.
Why Does Raceway Take This Approach?
The fuel industry, just like every other market, is highly competitive today. With lower margins and customers demanding the highest of quality for the lowest price possible, there is constant jockeying going about as businesses work to position themselves at the top of the minds of their targeted consumers. Some organizations do this by selling low margin items for no profit and encouraging sales in other areas. For Raceway, it has become through the building of relationships that are mutually beneficial.
You see Raceway benefits by having fuel purchased from them at your store. They provide the entire fueling chain and you’ve got nothing to worry about! You benefit by getting traffic to your location that could purchase your inventory and help you create a successful retail location. Working together, this relationship can build the brand, build Raceway’s profitability, and build your own as well. Neither is as effective on their own as they are when they are put together.
This gives you the benefit of being able to put your money toward real profitability instead of franchise or territorial fees. You’re investing in the inventory for your store, in finding good employees to work with you, and working to secure vendors that have the lowest prices possible. It’s a challenge, but one that many find to be fun, worthwhile, and sometimes extremely profitable. Does that sound like a lot of fun?
Is This the Right Investment Opportunity For You?
If you’re looking to get the full benefits of a franchise, then this likely isn’t the right opportunity for your investment. If, however, you’re looking for a chance to be your own boss, call your own shots, and strive for your own profitability with a low initial investment, then this could be a good opportunity to help you achieve your business goals. Raceway is accepted US inquiries about this opportunity, but most of the accepted opportunities are likely going to be from applicants who are in the Southeast US or are willing to relocate there.
This isn’t going to be an opportunity where there will be a lot of direct support. You’ll have a district manager with whom you can coordinate and they’ll show you the ropes on how the most success can be found, but otherwise you’ll be governed by the gasoline services agreement that you’ll be signing with Raceway. Having the fuel purchases come to Raceway does put you at a possible disadvantage in one aspect of the business, but it is in a place where the margins are the lowest. Drive traffic to your high margin items consistently and it won’t matter what the fuel price happens to be.
If you want the chance to control your margins, pay no upfront fees, and put the money in an investment into yourself instead of a franchise for branding rights, then this is the place to go. Otherwise a more traditional franchising agreement may provide more of what you’re looking for in an investment.