The Sunnyvale Sun
News
Decision looms on mix of groceries and gas
By Cody Kraatz
The city of Sunnyvale may ease restrictions on grocery sales at gas stations. Currently, only two service stations are allowed to sell groceries, but city staff reported that every station sells products that violate city regulations.
If the Sunnyvale City Council decides to modify the regulations, gas stations will be required to seek permits. If the council retains the existing regulations, the city will start issuing citations. The municipal code prohibits the retail sale of alcoholic beverages or groceries at service stations.
"Right now we're not taking an aggressive stance on enforcement," said Trudi Ryan, planning officer. The council is set to decide on Sept. 25.
The Sunnyvale Planning Commission heard a report Aug. 13 that relaxing the retail rules would benefit local businesses and nearby residents, if done properly.
"It's harder and harder for service stations to make ends meet just selling gas. Selling groceries increases their likelihood of success," said Andy Miner, a city planner.
Gas station owners agree. Jay Edadat owns a Valero station at Mary and Evelyn avenues and has considered options that would allow him to sell more in his snack shop, which comprises about 35 percent of his business.
"We don't make any money on the gas, and if we don't make any money off of this (shop), we better close the door and go home," he said, estimating that he earns a 2 percent profit margin on gas sales.
Independent gas stations, pressured to join corporate groups such as Valero, struggle to squeeze profits from gas sales after environmental regulations, credit card fees and payroll is factored in, he said. The gas brings people in, but snacks, cigarettes and alcohol have the biggest profit margins.
Allowing grocery sales may encourage service stations to renovate, a benefit for the city, Miner said. Ali Nasouti owns a Valero station on Bernardo Avenue near El Camino Real, and would like to expand his retail offerings into the repair shop, where he does only oil changes and smog checks now.
"I don't want to do repairs any more," he said. But his expansion, accompanied by renovations and branding by a franchise such as Circle K, hinges on alcohol sales. "If I can sell beer I'll expand, otherwise, no."
City officials said permits for alcohol would be issued separately from food groceries after considering distance from schools and parks and the hours of operation, the single greatest factor in the likelihood of robberies, officials said.
"I have a history of not selling cigarettes to minors. I'm not going to sell them beer," said Nasouti, who is down the street from Cherry Chase Elementary School.
Smaller grocery stores would be helpful in the north of the city where there are not enough large grocery stores for the growing number of residents, Miner said. However, Commissioner Bo Chang asked if allowing stations to sell groceries would discourage a larger grocery store from coming in.
Nasouti is near a Safeway, but said that while he would sell some of the same products, his customers would be looking for a quick shop and Safeway would draw customers willing to park and walk in.
Kevin Nguyen, who bought a Valero station at Mathilda and Maude avenues a few months ago, would not try to compete with the Lucky store next door, but would like to expand the grocery offerings in the space he has available now.
"I heard most of the money should come from the snack shop," he said.
The city held a meeting in early August that drew more service station owners than residents, officials said.
"Our business model is that we would like to incorporate grocery sales...at our convenience stores, and so we want work with the community make sure that we provide the services and conveniences they're looking for," said Janli Degenhardt, a Chevron spokeswoman.
She said Chevron has been encouraging cities such as Sunnyvale to change its restrictions. In the current business environment, station owners and the city would benefit if city regulations were less restrictive, she said.
