The Pump and Beyond: Inflation Hits Main Street

MELVINDALE, Mich. – Gas prices are a perennial concern, but in early 2025, the squeeze extends far beyond the fuel pump. Inflation’s relentless climb is now hitting the aisles of gas station convenience stores, impacting both business owners and everyday consumers. While some economists predict a potential easing of energy prices, the immediate reality is a challenging landscape for small businesses.

At Kelly’s Fuel Mart,a BP station on Allen Road in Melvindale,foot traffic is the lifeblood of the business.Imad Khalil, President of Kelly’s Fuel Mart & Propane Refill Center, emphasizes the importance of drawing customers inside: we can have 500 transactions a day. We try to get people to not only buy gas outside,which is convenient. We want them to come and shop at our store.

However, enticing customers to spend inside is becoming increasingly difficult amid rising prices.

The Bottom Line: Sales Dip as Prices Rise

Khalil, who owns three gas stations in the Detroit area, reports a concerning trend.His stations have experienced a 15% drop in sales this year alone, directly attributed to the increased cost of goods. This decline illustrates a broader challenge facing convenience stores nationwide: how to maintain profitability when both wholesale costs and operational expenses are escalating.

Examining specific examples reveals the stark reality of price increases:

These price hikes aren’t arbitrary. Khalil explains, we also don’t have the buying power of big box retail, so it costs us more, and then we, in turn, have to charge consumers more for it. This lack of purchasing power puts independent gas stations at a significant disadvantage compared to larger chains. To provide further insight into the challenges, here is a web video detailing Khalil’s observations:

WEB VIDEO: Imad Khalil walks through price increases

Beyond the cost of goods, khalil also cites rising transportation expenses and wage inflation for his seven employees. Last year, we raised our payroll for about $35,000, he notes, highlighting the pressure to remain competitive in a tight labor market. These layered costs contribute to the overall financial strain on the business.

The Unseen Drain: Credit Card Fees Take a Toll

Perhaps the most significant, and frequently enough overlooked, expense is the surge in credit card transaction fees. Khalil reveals the staggering amount his business pays each month: Credit card fees play a big role in that. We’re averaging probably about 90 to $10,000 a month just in card fees alone. He notes that this figure has nearly doubled from previous years, driven by the increasing prevalence of cashless transactions.

The shift towards a “cashless society” is undeniable, with 75-80% of transactions are done by, you know, credit cards, tap to pay now people don’t carry cash anymore according to Khalil. While convenient for consumers, this trend considerably impacts small businesses that bear the brunt of transaction fees. This increased reliance on card payments erodes already thin profit margins, forcing businesses to make difficult choices.

Some businesses are exploring surcharge options to offset these fees, a practice that remains controversial and subject to varying state regulations. Others are offering discounts for cash payments, incentivizing customers to use customary methods.

The Association Weighs In: A Vital Community Hub

Mark Griffin, president of the Michigan Association of Convenience Stores, confirms that the challenges faced by Kelly’s Fuel Mart are widespread. Griffin emphasizes the critical role these stores play in their communities: We pride ourselves on being neighbors, serving neighbors, and in many neighborhoods, we’re the, the only source for food. some folks have to travel a long way to get to a grocery store,so they rely on the local convenience stores. This highlights the essential service these businesses provide, particularly in underserved areas.

Griffin also sheds light on the surprising economics of the convenience store model: The store side, the food, the products, the beverages, and so forth, that’s only 30% of the gross sales, but it amounts to 70% of the profit. So, the real return on investment for many convenience store operators is those in-store items, not necessarily the fuel. This underscores the importance of in-store sales for the survival of gas stations, making the impact of rising costs even more critical.

Beyond Business: A Commitment to the Community

Despite the financial pressures, Imad Khalil remains committed to his community.He emphasizes the importance of providing quality service and supporting local initiatives. People come for donations. We try to focus on supporting all Melvindale programs, you know, we’d love to support and have a larger budget to support other programs, but we focus on those areas because those are the people that help us stay in business, Khalil explains. This dedication fosters goodwill and strengthens the bond between the business and its customers.

Khalil also offers a crucial reminder to customers: Gas station clerks have nothing to do with price hikes,so taking out the frustration on them achieves nothing. This plea for understanding and respect highlights the human element frequently enough overlooked in discussions about rising prices.

Navigating the Future: Strategies for survival

Looking ahead, gas stations and convenience stores must adapt to the evolving economic landscape. Strategies for navigating these challenges include:

• Optimizing Inventory: Carefully selecting products with higher profit margins and minimizing waste.
• Leveraging Technology: Implementing loyalty programs and mobile payment options to enhance customer experience and reduce transaction fees.
• Negotiating with Suppliers: Exploring opportunities for group purchasing or direct sourcing to lower wholesale costs.
• Advocating for Policy Changes: Supporting legislation that addresses credit card fees and promotes fair competition.

According to recent predictions, energy prices may decline providing some relief. Though, as Kalibrate CNBC notes, inflation may still rise, posing continued challenges.The ability to innovate and adapt will be crucial for the survival and success of these vital community businesses.