Why filling up takes forever

South African motorists may blame attendants for slow forecourt stops, but the economics of fuel retail tell a more complicated story. SHARMINI NAIDOO explains how convenience is increasingly shaping profitability nationwide. 

Most motorists dread service station visits, especially if they are in a hurry. They are inclined to wait until the fuel gauge is running on empty before turning into a forecourt, bracing themselves for a long wait because, inevitably, what should be a two-minute refuelling stop turns into 20 to 30 minutes – or longer if there is a pending fuel price increase.

This is because stopping at a forecourt can become an endless exercise in waiting – waiting for an attendant, waiting for the pump, waiting for the oil and window checks or waiting for a wireless card machine to find a signal. While this sluggishness is not necessarily intentional by design, the system’s inefficiencies may, in fact, help forecourt owners generate additional revenue.

Fuel margins are tightly controlled

Retail margins on petrol are strictly regulated by the Department of Mineral Resources and Energy (DMRE) through the Regulatory Accounting System (RAS). From the retail price paid per litre at the pump, the petrol station owner receives a fixed gross margin of roughly R3.05 per litre, or around 8 to 12%.

As in any other business, the retailer needs to cover operating expenses. In this case, these include forecourt staff wages, regulated by the Motor Industry Bargaining Council (MIBCO), which sets legally binding minimum wages, annual increases and shift rules for petrol attendants and cashiers.

There are also electricity costs for high-intensity lighting and pumps, card transaction fees, site rental, equipment maintenance and numerous other expenses. Bank swipe fees on credit card transactions can cost station owners 30 to 38c/litre, meaning some credit card fuel transactions are reportedly completed at little to no profit.

After accounting for operational overheads, the net profit on a full 50-litre tank of petrol may amount to only R10 to R15 (roughly 20 to 30c/litre, or a 1 to 2% net margin).

The real money is inside

Because fuel margins are capped and overall fuel consumption has flattened, forecourt operators cannot rely on fuel alone to grow their businesses. The real money spinner for retailers is increasingly found inside the convenience store.

While fuel sales operate on razor-thin, heavily regulated margins, non-fuel retail – including convenience stores, coffee, bakeries and fast food – operates on unregulated and substantially higher retail mark-ups. A single cappuccino selling for R40, for example, can potentially yield a higher net profit (at around R18 to R22) than filling an entire 50-litre tank with petrol.

Coffee delivers powerful margins

Brands such as Wild Bean Café, Seattle Coffee Co., Torrador and Vida e Caffè can offer some of the highest returns per square metre on a forecourt. A cup of coffee typically sells for around R35 to R48, while the raw ingredient cost – including beans, milk, cup and lid – may be only R8 to R12. Hot meals, pies, chicken tenders and burgers also tend to carry a high perceived value for commuters on the move.

Fuel retailers have therefore been steadily shifting towards a model that resembles a restaurant or convenience retailer that happens to sell petrol. Partnerships with brands such as Steers, Debonairs and Wimpy, as well as in-house hot-food counters, have become lucrative and can reportedly generate gross margins of up to 60%.

Convenience comes at a price

Convenience goods sold via outlets such as Woolworths Foodstop, Pick n Pay Express and FreshStop can carry a 10 to 20% price premium over standard supermarket shelf prices. Customers are often willing to accept those higher mark-ups in exchange for 24-hour access, immediate parking, quick checkout and the convenience of avoiding crowded shopping centres. Typical gross margins across major South African forecourt retail categories are shown in the accompanying table.

 A R40-billion market

According to 2023/2024 research by Trade Intelligence and the Fuel Retailers Association (FRA), South Africa’s forecourt convenience store and quick-service restaurant market is worth more than R40 billion annually. Data from the Nedbank Forecourt Retail Sector Report indicates that 46% of consumers visiting forecourt convenience stores do not purchase fuel at all, instead using the sites for coffee, hot meals or shopping.

It is perhaps unsurprising, then, that forecourt groups are investing heavily in sophisticated retail partnerships, rather than focusing exclusively on technology to accelerate the pump process. Slow turnaround may not necessarily represent a failure of the financial model. In some respects, longer dwell times can support it.

The value of captive dwell time

Known as “captive dwell time”, the principle is simple: motorists are effectively held on the forecourt while waiting to be serviced. Unlike conventional retail customers, who can leave whenever they choose, motorists who need fuel have little choice but to complete the transaction.

The longer motorists spend waiting for fuel or payment, the greater the opportunity for them to enter the convenience store. Retail analysts track this behaviour because longer forecourt dwell times can increase the likelihood of a customer stepping inside to buy a coffee, pie or grocery item.

According to the South African Petroleum Retailers Association (SAPRA), average total forecourt dwell time at urban full-service sites is between six and 11 minutes. When total pump turnaround exceeds four minutes, the probability of a driver entering the store reportedly rises from below 15% to more than 38%. Once drivers have been stationary for five to seven minutes, their behaviour can change and they become more inclined to leave the vehicle.

Why South Africa takes longer

Unlike North America or Europe, where self-service refuelling is widespread, South Africa operates almost exclusively on a full-service model. The sector employs more than 70,000 forecourt attendants nationwide, supported by labour regulations, job creation considerations and safety requirements.

While this creates vital employment, it can also introduce between 3.5 and five manual interactions into each transaction, including greetings, pump activation, windscreen cleaning, loyalty scans and retrieving payment terminals.

Together, these interactions can introduce a baseline two to three minutes of operational delay per vehicle that does not exist in many international self-service markets.

Small delays quickly add up

Several factors contribute to this:

• Manual pump clearance: Attendants must initialise pumps, sometimes waiting for central console clearance.
• Service protocols: Checking oil, water and tyre pressure can add three to five minutes when requested.
• Value-added extras: Capturing rewards programme numbers such as eBucks, Vitality or Smart Shopper, entering vehicle odometer readings, and printing paper slips all take additional time.
• Handheld terminal bottlenecks: Card machines are sometimes shared among attendants across several pump islands, requiring workers to walk back and forth across the forecourt.

When four or five cars arrive simultaneously, these small delays quickly accumulate. A single driver paying with cash or struggling with a card PIN can easily create a queue lasting 15 minutes.

Delays may bring benefits

On major corridors such as the N1 between Johannesburg and Cape Town or the N3 to Durban, forecourt delays may even provide an unintended road-safety benefit. Major highway rest stops, including 1-Stops and Ultra Cities, were historically developed partly around the needs of long-distance motorists and commercial drivers.

Driver fatigue remains a serious road-safety concern on long-distance routes. Designing highway forecourts with restaurants, clean toilets and truck facilities encourages drivers to stop for longer periods, to take a break from the road and rest.

The wait goes on

For road safety, longer stops can serve a valuable purpose. For the everyday motorist who simply wants to refuel and leave, however, the waiting game can be painfully time-consuming. As long as convenience retail remains central to the economics of the modern forecourt, however, the incentive to make every visit dramatically shorter may remain limited.

The wait, therefore, may be with us for some time – perhaps just long enough for you to step inside and buy that barista coffee and your evening meal.