Wage War

Convenience store operators had a solid year in terms of profits in 2015, but if there was one Achilles heel, it was direct-store operating expenses, which continued to rise and reached an average of $536,118 per store, a 4.1-percent increase compared to the prior year.

Most of the added expense came from wages, which jumped by nearly $18,000 per store to $264,185. Wages now make up more than 43 percent of a store’s profits, on average.

“The biggest hurdle to c-store growth, outside of the fundamental economic factors, are the c-stores themselves. It is still a challenge to hire quality, dependable staff, keep up with wages and health care, and to instill excellent customer service and store cleanliness on a daily basis,” noted Tim Powell, vice president of consulting for Q1 Productions.

With several states and local municipalities gung-ho on increasing the minimum wage to as high as $15 per hour, it is unlikely that wage relief is in sight for c-store operators.

Still, quality employees are more important than ever. “The perception of a gas station is less negative for millennials, but the older generation still maintains the wealth. The perception will depend on the industry’s focus on service fundamentals,” Powell added.

One bright spot in the expense area last year turned out to be credit card fees, which declined by an average of $1,207 per store, or 1.6 percent, to $73,167 per store.