The first location opened in Mission Viejo, California last month; a second is planned for Honolulu
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Costco $COST has opened its first standalone gas station, located in Mission Viejo, California, as record fuel demand at its warehouse pumps strains existing capacity. A Mission Viejo spokesperson told C-Store Dive that the opening ceremony took place on June 24.
City planning documents show the station has a 17,185-square-foot canopy covering 40 fueling positions, with entry limited to Costco members. It was built on the site of a former Bed Bath & Beyond, according to The Wall Street Journal. A second standalone station is planned for Honolulu, according to local government documents.
Costco Chief Financial Officer Gary Millerchip said the standalone locations are meant to address two situations: relieving pressure at existing warehouse gas stations that are running at capacity, and serving areas where a gas station cannot be built on the same property as a warehouse. "They're really intended to either alleviate some of the capacity constraints in the gas station that exists at the warehouse today or we just can't get a gas station on the same premises," Millerchip said. He added that the stations remain close enough to a warehouse to provide convenience to its members.
The new format reflects broader real-estate experimentation at Costco, which has found it harder over time to acquire land large enough for its traditional single-level warehouse stores, according to the Journal. Millerchip also mentioned a vertically built store concept as another alternative format under consideration.
Costco reported record gasoline volumes during its fiscal third quarter, with the five weeks ending in mid-May producing the highest gas-sales weeks in company history. Chief Executive Officer Ron Vachris said at the time that rising fuel costs had drawn members to Costco's pumps for the first time, and that shoppers who fill up at Costco generally spend more in the warehouse overall.
Costco prices fuel below the regional average at its locations. The regular gas at the Mission Viejo location was priced at $4.75 a gallon on a recent Friday, while AAA put the Orange County countywide average at $5.39. C-Store Dive reported the price at $4.59 per gallon against a roughly $5.30 county average at the time of its reporting.
Millerchip said the company is moving carefully with its standalone gas station plans. "It's still close enough to a warehouse that it's still providing convenience to the members of that warehouse," he said, adding that there are a couple more locations in the pipeline.
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