By Terry Appleby
We are investigating the possibility of expanded hours of credit card-only gas sales. If that plan moves forward, we will open the station earlier and close later. There will be no attendant available to take cash payments or make charges. The change to some hours of unattended gas operations will require minor equipment upgrades, but should further reduce operating costs at the station.
In December, the Co-op’s Board of Directors voted to continue operation of the Service Center for at least one additional year to determine if it was a viable operation and deserved additional investment. At that time, the Board also required that I keep the membership informed about the results.
Since the Board’s December meeting, we have made many changes and improvements to the station. The most noticeable physical change has been the remodeling of the front sales area of the station. The gas operation and service booking have been consolidated and are now together in that remodeled area. Joining together those two functions allow us to reduce labor expenses at the station. (Please be assured that all of the employees affected by the change have been offered other jobs within the organization.) Other personnel changes since January include the hiring of Jimmy Kidder as manager of the Service Center and hiring of Adam Rockwell, an ASC certified mechanic. Adam’s hiring allows the station to do more kinds of auto repairs.
Other changes to the station include Saturday hours for service. The Saturday openings have been popular for quick jobs that are hard for consumers to get done during the week, like oil changes and tire rotations, as no appointment is necessary. In order to further reduce costs, we also discontinued the sale of all food products at the station. Selling the small amount of food we did was not profitable for the station, as the time devoted to ordering, receiving, and stocking the product ate up any profit margin. Besides, we have a great source of food right across the parking lot!
Results for the first five months of 2012 have been encouraging from the service side of the business and are close to being at a break-even point on an operating basis. The gas portion of the business is another story, as that element of the Service Center business continues to perform poorly. The problem for our gas business is in the nature of market pricing. At times of rapid rises in gasoline prices, as was the case in the first quarter of this year, profit margins are very small, as retailers are reluctant to raise prices and lose customers. When the wholesale price of gasoline goes down, as has been the case recently, retailers typically move prices down slowly so as to make up some of that lost profit. For the Co-op, the first quarter saw high prices and extremely low margins, resulting in large losses. The situation improved in April and was better still in May. The first half of the year will result in losses, but they could have been much worse without the margin relief in those two months.
Changes still to come this year include removal of a gas tank that failed last year. While that job is being done, we will also uncouple the two existing tanks to allow us to again sell three grades of gasoline. We are also investigating the possibility of expanded hours of credit card-only gas sales. If that plan moves forward, we will open the station earlier and close later. There will be no attendant available to take cash payments or make charges. The change to some hours of unattended gas operations will require minor equipment upgrades, but should further reduce operating costs at the station.
Final results of our work will be re-evaluated at the end of 2012. Your continued patronage of the Service Center will be critical for the station to approach profitability.