Selling a Truck Stop or Travel Center

Diesel is the anchor

Most of the value starts at the diesel island. Buyers ask for gallons sold by month and by lane, split between the truck lanes and the car lanes, for several years. They want the margin per gallon on each, and they want to know how much of the diesel is sold to cardholders on a fleet program and how much to cash and credit customers at the pump. The truck lanes bring volume. The car lanes bring higher margin per gallon and more trips into the store.

Location sets the ceiling. A buyer will study the traffic counts on the highway, the distance to the next exit with diesel and parking, what competitors sit within a few miles and whether a new interchange or a road project is planned that could move traffic. Owners know this stretch of road better than anyone, and it helps to write down what you know about it, including how often the lanes back up at peak hours, because a buyer's own research may not catch it.

Fuel pricing practice matters. Buyers look at how often the pump price is changed, who sets it, how it relates to the cost at the terminal, and whether the station chases the competitor across the road. A shop that has held margin through price swings looks better than one that cut price to hold gallons.

Fleet cards, receivables and the card networks

Fleet card programs are a large source of diesel volume. A driver or dispatcher fuels with a card issued by a fleet card network, and the network pays the truck stop later, minus its fees. Buyers will ask which networks you accept, how much volume each brings, what discounts and transaction fees apply, and how long payment takes. A truck stop that takes a wide range of cards gets more traffic, and one that depends on a single network is exposed if the terms change.

Some travel centers also negotiate directly with fleets, offering a set discount off the pump price to carriers that commit to fuel there. These agreements are worth listing. A buyer will want to see the contract, the volume, and whether the fleet can walk. Our post on customer concentration explains how buyers treat a handful of large accounts.

Credit card processing fees can be heavy in this business because fuel sales are large in dollars. Buyers read the processing statements, and they like to see that the owner shopped the rates.

Parking, showers and the services around the trucks

Truck parking is a product. Buyers count the paved spaces, see how many fill overnight and watch how that changes by day of week. Some centers charge for reserved spaces and others offer parking as a draw to the restaurant and the fuel island. Whichever it is, a buyer will ask whether the lot has room to expand and what condition the pavement is in, since repaving a large truck lot is a major cost.

Showers bring drivers inside and are often a loss leader, though a few centers charge a fee or give a shower credit with a fuel purchase. Buyers will ask how many shower rooms there are, how often they are cleaned, how many are used each day and what the plumbing and water heating cost to run. Laundry, a lounge, a barber, a chapel and a driver store with truck supplies add small margins, and each is a reason for a driver to return.

Services such as a truck wash, a scale, a tire shop, a lube bay or a repair garage may be run by the owner or leased to an operator. A buyer wants to know which, and wants to see any lease. Diesel exhaust fluid, propane fills and a dump station also earn money and are worth recording. Casino or gaming areas exist at some travel centers, and the licensing rules vary by state and your attorney confirms what applies to yours.

The restaurant and the store

A full service restaurant or a franchised fast food outlet inside a truck stop is a business inside a business. A buyer treats it like any food operation, studying food cost, labor, hours, reviews and the standing of the manager. If the restaurant is a franchise, the franchisor will need to approve a new owner and may charge a fee or require upgrades.

The convenience store sells to cars and trucks. Buyers read it like any store: sales per square foot, category mix, cigarettes and tobacco, beer and wine, lottery and prepaid cards. The truck stop twist is the driver items, such as energy drinks, hot food, snacks, truck accessories and prepaid phone cards, which carry good margin and arrive in a steady flow.

Property, tanks and permits

Most travel centers sit on land the owner holds, and the property is a major part of the price. The real estate can be sold with the business or leased to the buyer, and the choice affects financing. Our post on real estate attached to the business walks through it. If you rent the land, see the lease as part of the deal.

Fuel storage requires attention. Buyers will ask for the age, type and material of the underground tanks and piping, the leak detection records, the inspection and testing history, and any prior contamination and clean up. A buyer's lender will almost always order an environmental review of the site, and a past leak can stop a deal or push the price down hard. Permits for the fuel system, the kitchen, the showers, the signage and any alcohol license need to be gathered. Some transfer with the sale and some must be applied for again.

Branded fuel brings another layer. If you sell under an oil company brand, the supply agreement may carry volume commitments, image requirements and a right to approve a new owner, and a buyer will read it carefully. An unbranded site buys fuel on the open market and has more freedom, along with more price risk.

Records, and what can sink a sale

Plan to provide business tax returns, monthly profit and loss statements for each profit center, fuel gallons and margin by month, fleet card statements, processing statements, the supply agreement, leases, tank records, payroll and a list of equipment. Keep the fuel, store, restaurant and services books separate so a buyer can see each one. Our post on getting financials ready for a buyer covers the basics.

The deals that fail usually share a few features. The environmental review turned up a leak. The supplier would not consent. The fleet card volume was concentrated in one network that changed its terms. The restaurant was losing money and hidden inside the store sales. The owner personally handled every vendor and every fleet account. Cash sales went unrecorded. Managers and cooks left when they heard a sale was coming, so we market a property without naming it and every buyer signs a nondisclosure agreement first.

Getting ready

Give yourself time to repair what shows. Fix the lot, the lights and the restrooms. Pull the tank and permit files into one place. Put the services and restaurant on separate books. Make sure a second person knows the fleet accounts and the supplier. At Business Advisors of America we start with a valuation built from your own gallons and margin, and the page on selling a truck stop or travel center is a good place to start.

This article shares our opinion and general information. It is not legal or tax advice. Always speak with a licensed attorney for legal advice, and a qualified tax professional for tax questions, before you act.