A small gas station's profit-and-loss statement looks like a single page of arithmetic. It's not. Half the lines hide decisions the seller made about how to present the business — some innocent, some less so. Here's the order of operations we use to pull the truth out of one.
1. Read the top line twice
Total revenue gets cited everywhere — “a $4M-a-year station.” That number is almost always fuel-heavy and almost always misleading on its own. Split it into fuel sales (gallons × average street price) and inside-store sales (groceries, snacks, tobacco, lottery commissions, prepared food, fountain). The fuel number tracks volume × commodity price, both of which can swing 20–30% in a year. The store number tracks operating skill and tracks it much more honestly.
A station doing $4M with $3.6M in fuel and $400K inside is fundamentally different from one doing $4M with $2.5M fuel and $1.5M inside, even though both look identical at the top. The second business has real margin and a moat. The first is a price taker.
2. Pull fuel margin to the surface
Fuel COGS is rarely shown net. You want cents-per-gallon margin: (fuel revenue − fuel COGS) ÷ gallons. National averages drift around 25–35 cents per gallon retail margin, less for branded high-volume stations, more for unbranded discounters in low-density markets. If the margin reads as 50¢ or higher, ask why — sometimes it's legitimate (rural single-station market with no competition); sometimes it's a one-time price spike not adjusted for, or the seller booked a rebate program in the wrong period.
3. Strip embedded family labor
The owner's working twelve-hour shifts behind the counter isn't free. Neither is their spouse. Many small-station P&Ls run very thin labor lines because the owner pays themselves a small salary on paper. As a buyer you have to add back what those hours actually cost at market — usually $35,000–$60,000 per FTE. If the station's “profit” evaporates after that adjustment, you're buying a job, not a business.
4. Match inventory cycles to receipts
Tobacco and lottery are weekly cash cycles with razor-thin margins. Fuel is a daily delivery cycle. If a P&L shows inventory growth that looks unrelated to revenue growth, you have either a lazy bookkeeper or someone capitalizing operating costs. Pull the bank statements (under NDA on Octaned, this is one of the gated documents) and reconcile deposits against shown sales for at least one quarter. They should be within 5%.
5. Three numbers to walk away on
If any of these three are missing or unverifiable in due diligence, default to walking:
- Cents-per-gallon fuel margin, computed from actual deliveries × actual prices, not from broker summaries.
- Inside-store gross margin %, computed from POS exports, not store-level estimates.
- Owner-add-backs, broken out as line items the seller will defend with documentation, not collapsed into a single “owner discretionary earnings” figure.
6. The conversation to have
Once you've normalized fuel margin, added back fair labor, and reconciled inventory, you have a defensible operating profit. Compare it to the asking price. The multiple on the adjusted number is the deal — not the multiple on the headline number the seller (or worse, the seller's broker) wants you to use.
Most sellers we've seen are honest. They just present their business optimistically, the way anyone would. The job of a buyer's P&L review is to convert optimism into arithmetic.