By Mark Fairlie.
“Bilking” is the act of filling up a car with fuel and driving off intentionally without paying. Some police forces have reported a 40% rise in “bilking” in their areas with the number of incidents nationally topping 25,000 a year, according to the Sun.
A local policing chief is calling on petrol stations to take payment from customers in advance however industry leaders are claiming that it’s not simple or practical to do this, in many cases.
Petrol stations’ low margin on fuel sales
Petrol stations don’t make much money on the sale of petrol and diesel, according to Brian Madderson, chair of the Petrol Retailers’ Association in an interview with Saga Magazine.
“Fuel stations often depend heavily on sales from the shop – a retailer can make more on selling a Costa coffee than on 40 litres of fuel,” he explained.
Petrol and diesel attract a fuel duty rate of 57.95p per litre onto which VAT at 20% is added. Other costs which push up the price of fuel include the cost of the fuel itself, delivery to the forecourt, business rates, and staff wages.
It’s for this reason that, at nearly all petrol stations, consumers find a retail concession attached.
The need to partner with outside chains
Even the economies of scale and a retail presence at every forecourt, petrol station operators find it difficult to make money.
Blackburn brothers, Mohsin and Zuber Issa, run 5,000 stores employing 25,000 staff in 8 different countries. The company turns over more than $20bn in sales and it has negotiated retail concession partnerships with companies as diverse as Spar, Carrefour, Starbucks, Subway, Burger King, KFC, Greggs and Pomme de Pain.
The brothers launched their first station in Bury, Greater Manchester, in 2001. They noticed that fuel sales were declining in their parents’ filling station and they, in an interview with the Financial Times,
“wanted to create a destination where you could get fuel, food-to-go, and shopping. This is the formula and it works”.
Despite the brothers’ impressive growth, the company makes, in profit, just over £3 for every £100 it turns over (company financial report to YE 2017).
Even though this level of profitability includes the company paying down debts incurred during its expansion, financial commentators point to this as a demonstration that petrol stations do need a retail offering to be commercially viable and that there is little room for them to cut prices to customers.
Simon Cole, the National Police Chief’s Association’s lead on local policing and chief constable for Leicester told the Telegraph that the industry could
“design out bilking in 30 seconds by making people pay up front, which is what they do in other countries… They don’t, because the walk into their shops is part of their business offer.”
Speaking to BBC News, Gordon Balmer, commercial manager of the Petrol Retailers’ Association said that some petrol stations would have to pay at least £20,000 to “retrofit” their existing pumps to take card payments although others estimated a much higher cost.
Mr Balmer also told BBC News that nearly three-quarters of petrol stations were independently owned and that more than half of an average forecourt’s profit came from non-fuel sales.