Costco is about to find out how popular its gas really is.
The wholesale club is planning to build a stand-alone 40-bay gas station in Mission Viejo, California, a suburb of Los Angeles.
The project comes after the company recently extended operating hours at several of the gas stations at its warehouses. Executives said the strategy led to a distinct uptick in sales.
“Members are probably looking for some greater flexibility than always having to go to the store,” Telsey Advisory Group retail analyst Joe Feldman told Business Insider of the stand-alone gas station plan. “Perhaps this is a play on that.”
The new development will be about two miles from two existing Costco warehouses, one of which already has a gas station. Many other Costco gas stations are located within a half-mile drive of a warehouse, or on the same property as the warehouse itself.
The Orange County Register earlier reported on the new gas station plans and said the station is expected to open in the spring of 2026.
Documents filed with the city planning office say the project will involve the demolition of a former Bed Bath & Beyond store and suggest the new fuel center will be doing brisk business.
As many as nine fuel truck deliveries are expected each day, with more than 9,500 vehicles stopping to fill their tanks between 5 a.m. and 10 p.m.
Costco did not respond to a request for comment on this story. The company doesn’t typically discuss new locations more than three months before their opening.
Gas is big business for Costco, which touts cost savings as one of the top perks of membership. Gasoline sales represented nearly one in eight dollars the company made last year — about $30 billion, according to Costco’s annual report.
Company executives have said in numerous earnings calls that they aim to keep their prices below the competition in a given area, and that’s before the 5% rewards that Costco credit cardholders get on fuel sales.
Selling gas off-site could help Costco alleviate some of the traffic that is bedeviling some of its busier warehouses’ parking lots, especially for members who don’t want to fight the crowds for a fuel-only stop.
CEO Ron Vachris has said several times that the company is looking at different ways it can “strategically” cannibalize the business of nearby warehouses that are straining under too much traffic.
Feldman thinks the strategy is likely focused on areas where Costco has a “density of membership.”
“It’s a competitive market out there,” he told BI. “This is just an effort to continue to provide more benefits to their members, and to try to retain them and keep them happy.”
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