Costco is known for their $1.50 hot dog/soda combo and cheap rotisserie chicken, and they’ve recently gotten recognition for their gas prices. They’ve had record gas sales this year due to prices around 10 to 30 cents lower than regular gas stations.
Last year, Costco announced that they were opening standalone gas stations. The first one just opened in Mission Viejo, California, and a second one is coming to Honolulu, Hawaii next year. This news comes as gas prices are on the rise again. As of July 13, the national average for regular gas is $3.86/gallon, with the highest prices averaging $4.83 on the West Coast. Costco’s new member-exclusive station has 40 pumps and is currently selling regular gas at about 70 cents less than nearby stations. Here’s more from Grocery Dive:
Costco officially opened its first standalone gas station in late June, a spokesperson from Mission Viejo, California, where the site is located, confirmed to sister site C-Store Dive.
The big-box retailer held a ribbon-cutting for the gas station on June 24, the spokesperson said. The site features a 17,185-square-foot gas canopy with 40 fueling positions and is only accessible to Costco Warehouse members, according to city planning documents viewed by C-Store Dive last year.
Costco already has a second standalone gas station in development, though it remains unclear how broadly the retailer plans to expand the concept.
While the site does not include a Costco warehouse or convenience store, it could divert traffic from nearby retailers. Circle K, ExtraMile, United Pacific, BP and Shell locations are all in the area, and could see declines in visits and merchandise sales.
The station, located about 50 miles southeast of downtown Los Angeles, opens as Costco continues to emphasize its fuel business. During the retailer’s third-quarter earnings call in May, President and CEO Ron Vachris said each of the quarter’s four-week fiscal periods set new company volume sales records, with the final five weeks becoming Costco’s five highest-volume fuel weeks ever…
Regardless of Costco’s long-term plans for standalone gas stations, the new Mission Viejo location will almost certainly put pressure on nearby convenience retailers, which are unlikely to match the wholesaler’s aggressive fuel pricing. According to Costco’s website, the station is selling regular gasoline for $4.59 per gallon — that’s roughly 71 cents below the Orange County average, according to AAA.
Costco is able to keep gas prices down because they make a profit by selling memberships. Even so, charging around 71 cents less per gallon is wild, especially in California. That’s worth the price of a basic $65 membership, even if you never shop at one of their warehouses. If their standalone station does well and they end up opening more, it could also hopefully alleviate some of their notoriously long, chaotic gas lines. On some days, half of my Costco’s giant parking lot gets so backed up from the gas lines that I can’t tell if I’m at a Costco or a Trader Joe’s. I’ve found the lines aren’t bad if you go on a Sunday evening or Monday morning.
If Costco is able to expand their gas stations, that also means they’ll employ more people. The Wall Street Journal recently reported that “many thousands” of longtime Costco employees have more than $1 million in their 401(k). One worker shared that his healthcare is so generous that it covered the cost of three of his wife’s brain cancer surgeries. They also recently announced a program offering deeply discounted fertility drugs to members. We need more companies that treat their employees well while also prioritizing member loyalty over profits.
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