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Despite skyrocketing gas prices throughout the summer, gas stations and other fuel retailers aren’t exactly flush with cash.
Prices were largely driven up on the supply side as bans on Russian oil — the world’s second-leading oil-producing country behind the United States — came alongside a rapid recovery in demand from newly reopening economies to create a chokehold on crude oil supplies around the globe.
Gross margins across the retail fuel industry have averaged 27 cents per gallon over the last five years. After all other expenses are taken out, margins can be so razor thin that retailers are actually selling at a loss during market downturns — like the infamous crash at the start of the pandemic in March 2020.
To make up for that, many retailers rely on convenience stores or other ancillary sales like car washes and basic maintenance services to pad slim fuel profit margins. EzFill Holdings Inc. EZFL, on the other hand, reports solving the margin problem by innovating the entire retail model to bring fuel distribution into the 21st century. Here’s how the pioneering mobile fuel-delivery company beat the industry standard with a 49-cent-per-gallon margin, even as crude oil prices soared.
EzFill Reports Strong Margin Growth In Second-Quarter Earnings Release
In August, EzFill reported second-quarter earnings driven by increased demand for its innovative on-demand fuel delivery service. Total gallons delivered increased from about 591,000 in the first quarter to nearly 790,000 in the second quarter.
Meanwhile, the company added about 40 new fleet customers with an anticipated need of about 1.2 million gallons per year.
All told, deliveries for the second quarter brought in over $3.7 million in revenue for an average margin per gallon of cents. That represents a 32% increase over the 37-cent-per-gallon margin the company reported in the second quarter of last year.
On-Demand, Mobile Fuel Delivery Reimagines The Retail Fuel Model
Behind EzFill’s rapid growth is arguably its innovative fuel model. Rather than a network of gas stations, the company delivers fuel directly to customers, wherever they are. Trucks carrying gasoline, diesel and other specialty fuels can come to customers’ homes, workplaces or other locations and fill the cars’ tanks. Very similar to the DoorDash Stock DASH model of on demand ordering and delivery.
For customers, that means no more trips to the gas station and no more running out of gas as they can simply use an app on their phone to schedule fuel deliveries while they’re at work or relaxing at home.
For businesses like Carnival Corp. CCL and Ryder System Inc. R, the mobile fuel delivery’s existing clients, vehicles, boats and machinery can be fueled up during off hours so that they can start the next work day with a fully fueled fleet.
That convenience and flexibility is helping drive the rapid growth in EzFill’s customer base, but it’s also helping the company maintain those healthy margins. EzFill can purchase fuel daily and deliver it directly from the port or fuel depot to the customer, eliminating the need for the hazardous and costly underground fuel storage that gas stations use and the costs associated with maintaining a network of gas stations.
Meanwhile, prescheduled deliveries and purchases allow EzFill to optimize routes to deliver fuel within scheduled delivery windows in the most efficient way possible to cut costs on time and fuel used to make those deliveries.
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