QuikTrip Growth Prompts Changes to Arizona Market

TUCSON, Ariz. -- Tucson gas stations have struggled over the last two years, with approximately two dozen closing, partially due to QuikTrip's expansion in the area, according to an Arizona Daily Star report. The Tulsa, Okla.-based gas station and convenience store chain has opened 13 locations nearby since January 2010, and has three more under construction.

"They're not building a station in order to capture new market," said Robert Mahlstede, former president of a company that owned 17 Catalina Mart stations in the area before selling them in 2011. "They're clearly and totally coming in to take share away from someone else."

However, QuikTrip spokesman Mike Thornbrugh stated that the chain's success is due to superior hiring and customer service. "We're coming in with a new prototype. We never stand still. We're always looking for a way to better or enhance ourselves," said Thornbrugh.

Independent gas stations were already facing difficulties competing with discounted fuel at other chains and grocery stores, according to Jesse Lugo, a former gas station owner and lobbyist for independent dealers. Some of the closed-down stations are purchased and converted by new owners, but others remained empty.

"It's just so competitive," Tom Cooley, who recently sold his independent station C&T Oil and retired, told the Star. "People like Fry's will sell it (gasoline) at about my cost on fuel. They'll give 10 cents a gallon off, and you can't compete with 'em. Circle K is building like crazy, and so is QuikTrip."

Credit card fees that eat into a narrow profit margin also strongly affect small operators, said Cooley, as does loss of property value. "Property values in gas stations have dropped tremendously, because there's so many of them on the market," he added.

The decline in property values makes it harder for independent owners to get financing, said Lugo. Another issue is the ability of oil refiners to run their refineries at high capacity and keep prices lower than independent retailers could, according to the report.

Ultimately, high fuel prices mean trouble for station operators. "When there's $4 per gallon fuel, people don't have disposable income they did at $2 per gallon fuel," said Troy Little, president of 26-store chain Quik Mart. "They won't come in to get that soda and a bag of Fritos."

As Tucson stations continue to struggle, it is unlikely that all will be sold to new owners, due to the area's surplus of gas stations, said Mahlstede. Some may be converted to new uses once a closed station's underground tanks are removed and the site passes environmental evaluations.