The Owner Demanded Higher Fuel Prices to Boost Margins—While the Manager Knew It Would Drive Every Local Customer Away
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Imagine realizing that you need to get gas for your car. Would you go to the gas station by the freeway or the gas station further away? Would it make a difference if the price of gas was a couple cents lower at one of these stations?
In this story, one store manager realizes it’s important to have gas prices that are slightly lower than the nearby gas station, but the store owner wants the prices to be higher.
The manager has no choice but to comply and raise prices, but he also decides to keep track of sales so he can prove the owner wrong.
Let’s read all about it.
Sure, we can try to make money on gas.
This really wasn’t a gas war but the convenience store I managed was in the country a couple miles from one that was right off the freeway.
They dictated the price and it didn’t really matter what my prices were but I had to keep my price even or a couple cents lower than them to keep customers walking into my store.
A little background.
OP didn’t start out working at a convenience store.
I was the grocery department manager in a large supermarket for this company.
I got offered the job at this convenience store because my bosses knew I was getting antsy.
At the time the company only owned 4 supermarkets and they told me that they weren’t looking to open any others (In the next 2 years they opened 4 more supermarkets).
In other words, this was my shot at managing a store, plus it was a couple miles from where I grew up.
It was definitely a big change.
I was hesitant about taking the job but whenever they offered you a promotion, you took it because if you didn’t, you would never be offered one again.
Moving from a large supermarket and ordering product by the pallet to a small store and ordering it by the half case was a lot to take in and get used to.
Eventually, I was finding my footing by hit or miss; learn from my mistakes.
One thing I had to learn about gas pricing was how willing people were to travel miles to save a cent or two on a gallon of gas. Even my own dad, who lived 2 miles from me, wouldn’t get gas at my store if I was higher.
He knew pricing was important.
I had to keep a constant watch on the other gas station to make sure my prices were in line with their’s.
I did this mostly by driving by there when I took deposits into town.
Most of the time I was keeping my price one penny below their’s.
My store’s owner didn’t like this though.
The owner wanted higher gas prices.
I kept convincing him that keeping my price in tune with the other stations was important to the rest of the store.
Eventually he started lecturing me about how much the gas storage tanks had cost, how much the pumps had cost, and how much the lighting had cost.
He ordered me to keep the price 2 cents higher than the other station.
Okay, I tried, but what could I do. He just didn’t realize that he needed to keep level with the other station in order to sell the profitable items that were inside the store.
OP complied but kept track of the sales as evidence.
From then on, I made sure my price was 2 cents higher, but I was also going to keep track of my sales over the coming months.
I let it go on all summer, the summer of despair.
At the end of summer, I had my ammunition.
Gas sales had dropped by half or more, but more important, so had our sales from inside the store.
Wow. The gas station really lost a lot of money.
I’m going on memory now so my totals are probably off somewhat. This was in the 1990’s.
The total sales for the store were probably down $20,000-$25,000 and the profit he made by selling gas 2 cents higher were maybe a couple hundred dollars.
So, he spent $25,000 in order to make $200.
Let’s see how the owner responds to the data.
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In September, I went in with my information and explained it all out to him and he relented.
He allowed me to stay at the same price as the other station.
Once I did that, the business came back. Not enough to save that gloomy summer though.
He complied, so the owner can’t get mad at him about losing the sales. He also had evidence, so the owner should be happy to know he has a manager running the store who really knows what he’s doing and knows how to bring in customers.
Letting the customer save a penny can convince them to spend a lot more.
Let’s see how Reddit responded.
First, a pun.
It is ironic.
This person thinks owners need to listen to their managers.
If you enjoyed this story, check out this post about a delivery driver who tried warning his boss the truck needed new brakes and tires, only to find his truck sidelined during their busiest season.
A former gas station employee weighs in.
I can’t imagine why a gas station owner would think customers would be willing to drive out of their way to get gas at his station if he charged more for gas than the competitor who was in a more convenient location.
The manger definitely proved him wrong. The data doesn’t lie.
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