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Fresno duo buck trend by buying, remodeling gas stations

- The Fresno Bee

Monday, Mar. 04, 2013 | 10:20 PM

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A new brand of gas stations is popping up on Fresno streets. Metro gas and the Food Zombie convenience stores are the work of a Fresno duo who are buying gasoline stations and remodeling them.

It's an investment that bucks the trend. Gas stations have been closing over the years as big oil companies and others get out of the business, citing California's wild gas price swings, expensive environmental regulations and other factors that chip away at profits.

But brothers-in-law Steve Zabarsky and Joe Martinez think they've got the formula to make it work.

They're buying stations with good-sized convenience stores and applying Zabarsky's years of retail management experience to turn them into successful retailers.

So far, they've switched over a station at Belmont Avenue and First Street to their trademark blue and green colors. A revamping of the station they bought at Cedar and Shields avenues is under way. And long-term, they hope to reopen the gas station downtown at Van Ness Avenue and Stanislaus Street.

Several other deals also are in the works.

Despite what many drivers think, gas station owners don't make big bucks selling gasoline. On average, gas station owners make 2 or 3 cents per gallon, according to the Sacramento-based California Independent Oil Marketers Association. They pay high prices to buy the gas from their suppliers and must sell it at a low enough price to attract customers but still make money.

Sometimes they lose money on gas, especially when prices are spiking.

That lack of profit is one of the reasons gas stations are closing. Oil companies in particular are getting out of the gas station business, finding there is much more money to be made refining and selling oil, said Jay McKeeman, vice president of government relations for the oil marketers association.

Thousands of stations have closed statewide since the 1980s, he said. In the San Joaquin Valley, there are 94 fewer gas stations than there were five years ago, according to permit records from the San Joaquin Valley Air Pollution Control District.

McKeeman said gas station owners face other hurdles, too, including environmental regulations that leave owners facing big bills to keep their stations running safely.

Some have had to replace underground storage tanks at a cost of up to $100,000, including permitting, he said.

Others have had to install vapor recovery systems -- including the rubber coverings over nozzles -- that can cost tens of thousands of dollars.

And since gas stations often are located on prominent, busy intersections, owners often find there are more profitable businesses suited to the property, said Tim Stearns, director of the Lyles Center for Innovation and Entrepreneurship at Fresno State.

"Per square foot, you can make more money selling pharmacy and sundries than you can gasoline and quick snacks," he said.

But there's still opportunity available, Stearns said. Most entrepreneurs jump into growing industries, but plenty find ways to make money in shrinking industries, he said.

"Any time there's an industry that's not doing well, there are opportunities for some who can figure out new models and ways to increase (business)," he said.

Zabarsky thinks he can take advantage of that opportunity. Even with the volatility of gas prices, he says he'll still make money on gas in the long run.

He also will rely more on what is sold inside the convenience stores. Gas is becoming a smaller part of a station's income as sales of corn nuts and sodas, for example, have a much higher profit margin.


The reporter can be reached at (559) 441-6431, bclough@fresnobee.com or @BethanyClough on Twitter.

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