Costco Takes Bold Step with First Standalone Gas Station
Warehouse retail giant Costco is making a significant move into the fuel market with plans for its first-ever standalone gas station. This facility, dedicated exclusively to fuel sales, is set to be built in Mission Viejo, California, and is poised to become Costco’s largest gas station location to date.
Unlike typical Costco fuel stations that are attached to warehouse stores, this new site will operate independently. The project underscores Costco’s growing focus on its gasoline business, which has proven to be a major draw for its millions of members.
Location and Details of the New Facility
The planned standalone station will be located at 25732 El Paseo in Mission Viejo, California, off the I-5 Freeway. The site previously housed a Bed Bath & Beyond store, which will be demolished to make way for the new fueling facility.
According to city planning documents, the station is designed to be substantial, featuring a large 17,185-square-foot canopy covering an impressive 40 gas pumps. This capacity makes it significantly larger than most existing Costco gas stations. The facility will also include essential infrastructure like three large underground storage tanks, six parking spaces, and an employee breakroom.
Access to the pumps at this new location will be exclusively for Costco members, a standard policy across all Costco fuel stations. The station is expected to operate daily from 5 a.m. to 10 p.m., offering convenient hours for commuters and shoppers alike.
Why Standalone Fuel? The Strategic Advantage
Costco’s decision to build a fuel-only site is a strategic move aimed at leveraging the immense popularity of its gasoline offerings. Gas is a key driver for member loyalty, consistently cited as one of the primary reasons individuals pay for a Costco membership, which ranges from $65 to $130 annually. Kirkland Signature gasoline is known for competitive pricing, further enhanced by the 5% rewards offered to Costco credit cardholders on fuel purchases.
By separating the gas station from the busy warehouse, Costco aims to achieve several goals:
Increase Member Convenience: Offering fuel at a dedicated site can help alleviate the notorious traffic congestion and long lines often experienced at gas stations located within existing Costco warehouse parking lots.
Boost Fuel Volume: A large, easily accessible standalone station can serve more members more efficiently, driving higher overall fuel sales.
Strengthen Membership Value: Providing convenient access to discounted fuel reinforces the benefits of being a Costco member.
Expand Market Presence: A standalone model allows Costco to establish a fuel presence in areas where building a full warehouse might not be feasible or necessary.
This initiative is part of a broader effort by Costco to enhance its fuel operations. The company recently extended operating hours at many of its existing gas stations across North America and is actively upgrading and expanding facilities at approximately 60 locations. CEO Ron Vachris noted in a recent earnings call that these efforts, combined with lower prices, have led to record-high weekly gallon volumes.
Timeline and Industry Context
Construction on the Mission Viejo standalone gas station is anticipated to begin in the fall of 2024, with an expected opening date in the spring of 2026. The project received approval from the city’s Planning and Transportation Commission earlier this year.
Costco has operated gas stations since 1995 and currently manages 719 globally. Fuel contributed approximately 12% of the company’s global net sales in 2024, highlighting its importance to the business model. This expansion positions Costco as a growing competitor in the fuel retail sector, directly challenging traditional convenience store chains like Circle K and established brands like Chevron and BP in the area.
The move also reflects a trend among big-box retailers; for example, Walmart is also significantly expanding its gas station footprint across the U.S.
Beyond fuel, Costco is also making other adjustments to enhance the member experience, including reportedly allowing Executive members in the U.S. to shop an hour earlier than standard members, starting June 30.
The construction of this first standalone, high-capacity gas station represents a significant investment and a strategic evolution for Costco, signaling a potential path for future fuel expansion independent of its traditional warehouse locations. Local officials and members alike are anticipating the benefits of this new, large-scale fueling option.
