More Plant Shutdowns

[Don Bradner]

Ryan, this is much like Grocery stores saying they have margins around 1%

In neither case are they talking about gross margins, but rather net profits. A
lower gross margin with very high volume can produce net margins greater than
that of a low-volume, high-margin business. "Can" being the operative word - not
every discounter succeeds, by any means, but it is a workable situation for some
retailers, fuel or otherwise.

Flying J is a good example, but not particularly applicable in your
neck-of-the-woods because the FJ stations are Franchises rather than
company-owned. Elsewhere most FJs are company-owned and have lower prices than
those around them except where the competitors choose to price-match.

On 4/22/2008 at 10:25 AM Ryan Wright wrote:

>I always hear how gas stations operate on a
>penny per gallon margin at best, but this guy has been profiled in the
>local paper and claims that's BS and that he is still making a profit
>at the lower price point.