Gas Station Planning in the United States: Fuel and Convenience Retail Trends

Overview of the U.S. Gas Station Landscape

The United States is home to roughly 150,000 fueling stations, the majority of which are convenience stores that sell fuel. In fact, convenience retailers dispense about 80% of all U.S. gasoline This landscape is highly fragmented: about 55% of fuel-selling convenience stores are single-store operators (often independent owners). Major oil brands still loom large on signage – around half of gas outlets carry an oil company brand – but in reality most are locally operated small businesses under supply contracts. Overall industry sales are enormous (over $859 billion in 2023), yet fuel revenue dominates top-line figures while in-store sales and services drive a disproportionate share of profit. The long-term trend has been one of consolidation and gradual decline in station numbers over past decades, a trajectory expected to continue as the market evolves. Analysts warn that without business model tweaks, up to a quarter of stations globally could risk closure by 2035 amid changing energy trends. In this context, investors and developers must understand how fuel demand shifts and retail innovations are reshaping the modern gas station business model.

Market Trends Impacting Fuel Sales

Several forces are reshaping U.S. fuel sales volumes and growth prospects. Vehicle electrification is a key trend: U.S. consumers bought a record 1.3 million electric vehicles in 2023, and EVs accounted for roughly 8% of new car sales that year. Rapid EV adoption – alongside increasing hybrid vehicle sales – points to a future where gasoline demand faces structural decline. Indeed, U.S. gasoline consumption peaked around 2018 at ~9.3 million barrels per day and is projected to plateau or slightly contract going forward (about 9.0 million barrels per day in 2025) Even conventional vehicles are becoming more fuel-efficient each model year, thanks to stricter standards – the average new light-duty vehicle now delivers roughly 26–27 mpg, nearly double the 1970s level– which gradually erodes per-vehicle fuel use. Additionally, societal shifts such as increased work-from-home arrangements and urban multimodal travel are dampening fuel demand growth. These factors, combined with periodic oil price shocks, have already led to volatile fuel sales; for example, total U.S. convenience fuel sales fell to $532 billion in 2023 as pump prices dropped over 11% from the prior year. Fuel retailers are thus navigating a landscape where gasoline demand is near its apex and likely to soften, prompting a turn toward alternative revenue streams.

At the same time, liquid fuel is far from vanishing overnight. The vast majority of U.S. vehicles still run on gasoline or diesel, and fuels like ethanol-blended gas (E10) remain ubiquitous (ethanol now makes up about 10% of U.S. gasoline by volume). Consumer preferences are evolving, however. There is growing interest in alternative fuels(such as higher ethanol blends, biodiesel, or even emerging options like hydrogen) in certain markets, often spurred by government incentives or mandates. Meanwhile, many drivers have gravitated toward premium gasoline for newer turbocharged engines, nudging up the share of premium grade sales in recent years. Overall, investors should expect flat to declining long-term fuel volumes in the U.S. – especially in light of state policies pushing zero-emission vehicles – with any growth concentrated in niches (e.g. diesel for freight or jet fuels for travel) rather than everyday gasoline consumption. Planning new stations now means anticipating a future of slower fuel demand growth and preparing to serve a diversifying mix of energy needs.

Market Trends in Convenience Store Retail Sales

Modern gas stations are increasingly as much about the convenience store as the fuel pumps. In recent years, c-store inside sales have seen robust growth, buoyed by food service and higher-margin product categories. Industry data shows in-store sales climbed over 8% year-over-year in both 2022 and 2023 – growth that outpaced inflation and far exceeded fuel volume gains. This reflects a strategic shift: retailers are focusing on becoming food and beverage destinations. During the pandemic, convenience stores proved their resilience by serving quick-grab essentials, and now many brands aim to be viewed “as a restaurant just as much as — if not more than — a gas station”. For example, regional chains known for fresh food like Wawa and Buc-ee’s have been expanding aggressively into new betting on consumer demand for quality convenience food. Prepared food programs, gourmet coffee, and made-to-order snacks have become core attractions – in 2023, prepared food sales in c-stores grew by an impressive 12.2% as operators expanded menus.

This pivot toward foodservice and premium offerings is transforming station economics. Food and beverages now contribute roughly 30% of in-store sales (and an even larger share of profit) for the average convenience retailer. Notably, hot dispensed beverages, fresh sandwiches, pizza, and other quick-serve foods have among the highest margins in the store. Private label products are another growth area: many chains are launching their own brands for snacks, drinks, and even tobacco alternatives. For instance, industry leader 7-Eleven doubled its new private-label items in 2024, pursuing unique products and enjoying margins above 50% on store-brand goods (versus ~32% on national brands). U.S. consumers have embraced these store brands – nationwide, private-label sales hit a record $271 billion in 2024, outpacing national brand growth. By curating exclusive, high-margin products (from gourmet nuts and energy drinks to take-home meal kits), convenience retailers are driving repeat visits and differentiating themselves from competitors. Shifting consumer behavior also plays a role: drivers are more comfortable now treating the gas station as a one-stop shop – not only to refuel the car, but to grab lunch, pick up groceries, or get a quality cup of coffee. As a result, c-store retail sales have become the primary engine of growth for the industry, making the on-site experience and product mix critical factors for new station success.

Profitability Drivers and Business Model Shifts

The profit formula for gas stations has evolved significantly. Fuel sales still make up the bulk of revenue for a typical station, but they offer razor-thin margins. On average, the gross margin on gasoline is only on the order of 10¢ per dollar of sales (roughly 10% margin), since most of the pump price goes toward crude oil costs, refining, taxes, and other upstream expenses. In 2023, fuel accounted for about 67% of an average convenience station’s sales but only 39% of its gross profits. This imbalance is why modern gas station operators emphasize in-store business – virtually any item in the shop (from a cold soda to a bag of chips) carries a healthier profit margin than a gallon of gas. Industry reports confirm that foodservice, in particular, punches above its weight: while food/beverage was ~30% of inside sales in 2023, it delivered about 37% of in-store profit. Simply put, selling a $2 cup of coffee or a $5 sandwich can yield far more profit than selling a few gallons of fuel. This dynamic has driven a business model shift – today’s gas station is a retail convenience outlet that also sells fuel, rather than the other way around.

To bolster profitability, station owners are diversifying and innovating their offerings. One major trend is the addition of ancillary services like car washes, which provide steady, high-margin income streams. There are over 80,000 car wash facilities nationwide (many attached to gas stations), comprising a ~$15 billion market in 2024. Gas stations leverage these with tactics like monthly wash subscription clubs and pay-at-pump wash purchase options, turning car washing into a reliable revenue booster. Likewise, co-located quick-service restaurants (QSRs) or franchise food counters have become common – a station might house a Subway, McDonald’s, or regional fast-food outlet, generating rental income or profit-sharing. Some convenience brands have even developed their own in-house restaurant concepts. On the fuels side, retailers have adjusted their fuel procurement strategies (e.g. unbranded fuel sourcing and price optimization) to eke out extra cents of margin where possible. They also know that fuel price volatility can be paradoxical for profits: counterintuitively, gas retailers often see profits shrink when oil prices spike (due to higher wholesale costs they can’t fully pass on) and margins improve when prices fall. This volatility encourages a focus on stable income sources like store sales.

Consolidation and scale efficiencies are another shift in the business model. While independent mom-and-pop operators still dominate numerically, the largest convenience store chains (7-Eleven, Circle K, Alimentation Couche-Tard, etc.) have been growing via acquisitions and new builds. Larger operators benefit from economies of scale in procurement and technology, and they can pilot new concepts more easily (such as EV charging hubs or cashier-less checkout). That said, single-store entrepreneurs are also thriving by catering to local tastes and fostering community loyalty. Many have carved out specialties – for example, a rural gas stop might become locally famous for its barbecue counter, or a highway travel center might double as a mini-farmers’ market on weekends. Across the board, gas station profitability now hinges on driving non-fuel sales, managing costs tightly, and diversifying services. The most successful operators have effectively become multi-revenue businesses: fuel draws in traffic, and once customers are on-site, the aim is to satisfy as many needs as possible – meals, snacks, coffee, car wash, groceries, package pickup – thereby maximizing the profit per visit.

Strategic Considerations for New Station Planning

Planning a new gas station in today’s environment requires a strategic, multifaceted approach. Investors and developers should carefully evaluate several key factors:

• Location and Access: “Location, location, location” remains paramount for fuel retail. A prospective site should offer high traffic counts, easy ingress/egress, and strong visibility. Corners or intersections with traffic lights are prized, as slowing or stopped traffic increases drivers’ awareness of the station. Demographic and traffic pattern analysis is crucial – for instance, a site near a highway exit may thrive on transient motorists and truckers, whereas a neighborhood site depends on local resident loyalty. Consider growth trends in the area (new housing developments, shopping centers, commuter routes) and avoid market saturation where nearby stations already fulfill demand. Adequate lot size for maneuvering and future expansion is also important, as are any zoning restrictions or permitting hurdles that could affect development.

• Station Format and Footprint: The optimal design and format depend on the target market. Developers must decide between a smaller neighborhood convenience station versus a larger travel center format. In suburban or urban neighborhoods, a compact format with a limited number of pumps and a small-footprint store (or even a kiosk-style operation) might suffice – emphasis here is on quick trips and serving daily needs of the community. In contrast, highway travel centers or truck stops require expansive layouts: dual truck and car fueling areas, ample parking for trucks/RVs, and amenities like showers or lounges. Some new builds are hybrid formats, for example incorporating a drive-thru fast-food restaurant or an outdoor seating area for on-site dining. Flexibility is key; a good design will allow reconfiguring spaces as needs change. Also consider aesthetics and branding – modern stations often invest in attractive design, lighting, and landscaping to signal safety and cleanliness (important for drawing in travelers, especially families).

• Fuel Mix and Energy Offerings: A new station must be future-focused in its fuel offerings. At minimum, providing multiple grades of gasoline and diesel is expected, but savvy planners are now allocating space and electrical capacity for EV charging stations. Many states and federal programs offer incentives for installing fast chargers, and being EV-ready can differentiate a site early on. It is noteworthy that high-powered DC fast chargers (Level 3) can charge an EV in ~20–30 minutes, but installing a bank of them is capital-intensive – often $500k to $1 million for multiple units. However, those costs are increasingly offset by grants, and traditional fuel retailers are seizing the opportunity (over half of federal EV infrastructure grants to date have gone to chargers at gas stations or truck stops). Incorporating EV charging taps into the station’s strengths – well-lit, safe locations with restrooms and food options are ideal for EV drivers’ 30-minute stops. Beyond EVs, consider local demand for alternative fuels: in farming regions a higher-ethanol blend (E85) might attract flex-fuel vehicle owners; near trucking corridors offering diesel exhaust fluid (DEF) and possibly renewable diesel could be a draw for fleets complying with low-carbon fuel standards. Some forward-looking projects even reserve space for future hydrogen pumps or natural gas (CNG/LNG) dispensers if warranted by regional adoption. The guiding principle is to design flexibility into the fueling infrastructure – for example, ensuring underground conduit is in place for additional EV chargers, or tanks can be added or repurposed for new fuels. A well-planned fuel mix strategy will position the station to capture emerging revenue streams as energy trends evolve.

• Amenities and Customer Experience: The profitability of a new station will heavily depend on its ability to offer amenities that encourage customers to spend more time (and money) on-site. Convenience store design should prioritize a pleasant, clean, and efficient customer experience. This includes modern restrooms (often cited as a top factor in station choice), an inviting store layout, and perhaps a seating area if foodservice is a focus. Foodservice capabilities are essential – whether it’s a simple coffee bar and roller grill or a full made-to-order kitchen – since food and beverage sales drive margin. Many new stations incorporate branded quick-serve restaurants or a fresh deli concept inside to bolster food credibility. Additional services can set a station apart: a drive-thru window for coffee/breakfast, a curbside pickup area for mobile orders, an ATM or even banking services, and amenities like free Wi-Fi which can be important for EV customers waiting during a charge. For highway or rural locations, consider traveler needs such as play areas for kids, pet relief zones, showers and laundry (for truck stops), or lounge areas. Car washes, as mentioned, are a popular add-on amenity – their inclusion can increase the total draw of the site. Finally, parking and traffic flow must be well-engineered: ample parking spots for store-only customers, separate fueling lanes for trucks if applicable, and safe traffic patterns to prevent congestion. In sum, a new station should aim to be a convenient “one-stop” hub for fuel, food, rest, and other needs, tailored to the profile of its likely customers.

Regulatory and Environmental Trends

The fuel retail industry is increasingly shaped by environmental regulations and policies, which must factor into station planning. Climate initiatives at state and local levels are beginning to directly impact gas station development. For example, multiple cities in California (such as Petaluma and Santa Rosa) have enacted bans on permitting new gas stations to combat climate change, and similar proposals have emerged in larger cities like Los Angeles and Sacramento. These policies signal that in certain regions, traditional gasoline station expansion will be constrained or even unwelcome. Moreover, future vehicle sales mandates will influence demand: California and other states following its lead plan to require all new passenger vehicle sales to be zero-emission (electric or hydrogen) by 2035, which over time will significantly reduce gasoline vehicle population. While that horizon is a decade out, developers must weigh the long-term viability of new gasoline-focused infrastructure in jurisdictions with aggressive decarbonization goals.

Environmental compliance is another key consideration. Underground storage tank (UST) regulations have tightened over the years to prevent leaks and soil contamination – new stations face strict standards for tank materials, leak detection systems, and insurance for remediation. There are costs associated with compliance, but cutting corners can lead to heavy fines or liabilities, so this must be budgeted from the outset. Additionally, station developers should anticipate fuel composition regulations that could change the products they offer. The federal Renewable Fuel Standard already ensures that gasoline contains about 10% ethanol nationwide and there are discussions about higher blends (E15 or E85) and increasing biodiesel or renewable diesel use in the diesel pool. Some states have or are considering Low Carbon Fuel Standards, which could effectively require stations to sell lower-carbon fuels or buy credits. In practical terms, this might mean installing an extra tank for E15 gasoline or sourcing advanced biofuels to blend.

On the positive side, government incentives and funding are flowing to support the energy transition at retail. The 2021 Bipartisan Infrastructure Law and 2022 Inflation Reduction Act include billions in funding and tax credits for EV charging stations, alternative fuel infrastructure, and even point-of-sale technology upgrades. Gas station operators have been actively tapping into grants for EV chargers – as noted, a significant portion of federal EV charging grants are going to traditional fuel retailers. Some states also offer grants for installing renewable fuel pumps or EV chargers, and utilities may provide make-ready electrical infrastructure at reduced cost. Environmentally, new stations can also expect higher community scrutiny. Sustainability features like solar panel canopies, LED lighting, and electric fleet parking can help in obtaining permits and community buy-in, showing that the project aligns with green goals. Overall, navigating the regulatory landscape means staying ahead of environmental mandates (to avoid stranded assets) and capitalizing on incentives to modernize the station’s energy offerings. Successful new developments will be those that can thrive under stricter environmental expectations – for example, by being EV-ready, clean-fuel-friendly, and community-conscious from day one.

Notable Innovations and Disruptions in Fuel Retailing

The gas station of the future is taking shape today through a variety of technological and service innovations. One major area is the digitization of payments and customer interactions. Most stations long ago adopted pay-at-the-pump, but now many are rolling out mobile payment apps and contactless payment options to cater to smartphone-savvy consumers. For instance, large fuel brands have apps that allow customers to authorize a pump and pay through their phone (often integrating loyalty discounts automatically). This not only speeds up transactions but provides valuable data on customer habits. Inside the store, retailers are investing in automation and AI to streamline service. Self-checkout kiosks have begun appearing in convenience stores, using computer vision or barcode scanning to let shoppers quickly pay without a cashier. Some chains are even testing “just walk out” technology or ordering kiosks for made-to-order food, reducing wait times and labor needs. Additionally, digital menu boards and personalized marketing (via geofenced app notifications or at-pump screens) are enhancing the promotional capabilities at gas stations. These technologies aim to boost throughput and encourage impulse purchases, all while meeting modern consumers’ expectations for convenience and speed.

Another transformative disruption is the integration of electric vehicle charging and other alternative fueling solutions into the traditional station model. As EV adoption grows, gas stations are turning into “energy stations” offering both gasoline and electrons. Major oil companies and convenience store chains have initiated plans to install fast chargers at thousands of locations across the country, sometimes in partnership with EV charging networks. This trend is being accelerated by public funding – as noted, federal programs are actively supporting charger deployment at fueling siteseenews.net. While EV charging currently does not generate the same revenue as fuel sales, it’s seen as a vital long-term play to attract the next generation of drivers. Some pioneering stations have even converted entirely to electric charging (for example, a Maryland gas station made headlines as the first to replace all its pumps with EV chargers), though most will adopt a hybrid model for years to come. Apart from EVs, stations are exploring other new fuel types: a handful in California now dispense hydrogen for fuel-cell vehicles, and truck-oriented locations increasingly offer LNG or CNG for trucking fleets aiming to cut emissions. These are still niche, but they signal that fuel retailers are willing to experiment with diverse energy offerings.

Finally, customer engagement and loyalty innovations are disrupting how gas stations retain business. Nearly every major chain now has a loyalty program, often app-based, rewarding customers with fuel price discounts or free items for frequent visits. These programs are proving effective – studies show that a large majority of a c-store’s loyalty members become top-tier regular customers (over 80% of loyalty members are among a station’s most frequent visitorsaccording to recent data) By analyzing purchase data, operators can tailor promotions (e.g. targeted coupons for coffee to a morning commuter, or fuel discounts tied to in-store purchases) and maximize cross-selling. Some programs partner with grocery or travel loyalty schemes to broaden their appeal. Additionally, gas stations are leveraging their physical presence for new services: for example, Amazon package lockers are now common at convenience stores, and some locations offer last-mile delivery hubs for online orders. Looking ahead, the industry is even eyeing possibilities like autonomous vehicle refueling/charging, or using drones for delivering convenience items to nearby customers.

In summary, the gas station business is reinventing itself through technology and innovation. Digital payments and automation are enhancing efficiency, EV chargers and alternative fuels are opening new customer segments, and loyalty tech is deepening customer relationships. These disruptions, combined with shifting fuel economics and environmental pressures, are pushing the humble gas station to evolve into a multi-purpose energy and retail hub. For investors and developers, staying attuned to these trends – and incorporating flexibility to adapt to them – will be critical for any gas station project to thrive in the coming years

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Sources:

1. NACS – Fuel Sales and Industry Overview

2. U.S. Energy Information Administration – Gasoline Demand and Vehicle Trends

3. NACS/Cox Automotive – Electric Vehicle Sales Statistics (2023)

4. C-Store Dive / NACS Data – Convenience Store Sales and Growth (2021–2023)

5. NACS State of the Industry Report 2024 – Profit Breakdown and Foodservice Share

6. Oklahoma Farm Report – Private Label and Foodservice Trends

7. Convenience Store News – Car Wash Industry Figures

8. Gas Station Feasibility Study

9. CNBC / BCG Analysis – Future of Gas Stations in EV Eral

10. E&E News – EV Charging Infrastructure at Gas Stations

11. Local Policy News – Gas Station Bans and Climate Policy