MELVINDALE, Mich. (WXYZ) — Gas prices are going up! What's new, right?! Well, it turns out the pain is not only at the pump, but inflation is also being felt inside gas station convenience stores.
At Kelly's Fuel Mart at the BP gas station on Allen Road, foot traffic means everything.
"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," said Imad Khalil, President of Kelly's Fuel Mart & Propane Refill Center.
Khalil owns the Melvindale gas station and two others in Detroit. He says this year alone, the station has lost 15% in sales due to the rising price of goods.
WEB VIDEO: Imad Khalil walks through price increases
"This small bag of Cheez-it is $1.49 Cheez-Its," said Imad.
"And that's $2.29," said Faraz Javed, 7 News Detroit reporter.
"Correct. We're selling a 20-ounce pop for $2.59," said Imad.
"What was it before?" asked Faraz.
"$1.99. Yeah, Red Bull's had some major price increases. Monster, all these beverages have gone up substantially. A bottle of oil like Pennzoil which we sell now like $6.49, we used to sell this maybe $4.99. I mean, so many things have gone up. Even frozen food items that we carry, you know, we obviously... we don't want to mark up prices. 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.
Then there is a rise in transportation costs as well as wage inflation for his seven employees.
"Last year, we raised our payroll for about $35,000," said Imad.
The biggest item on the list is rolling on to consumers...
"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," said Imad.
"How much was it before?" asked Faraz.
"It was it 4 to 5000 or less because, now we're going to like what appears to be like a cashless society where most people are spending like I was saying 75-80% of transactions are done by, you know, credit cards, tap to pay now people don't carry cash anymore, so that's also a big factor and when we're calculating our margins," said Imad.
The president of the Michigan Association of Convenience Stores, Mark Griffin, is not surprised to see the broader impact of inflation, which, as per the Consumer Price Index, the current US inflation rate is 2.8%.
"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," said Griffin.
"For a gas station to survive, how important are sales at the convenience store?" asked Faraz.
"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," said Griffin.
Offering quality service at the store and supporting the community are just some ways Imad tackles challenges as a small business owner.
"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," said Imad.
Imad also reminds customers that gas station clerks have nothing to do with price hikes, so taking out the frustration on them achieves nothing.
