For a retail chain that makes changes in baby steps, a relatively large leap for Costco is coming to Mission Viejo.
The membership-only retailer will build what city officials say is the chain’s largest gas station and its first fuel-only location.
Yes, there are many Costcos selling fuel under the chain’s Kirkland brand. It’s a popular membership amenity because the prices are often among the lowest in the market.
Costco also sells gas at one of its warehouses just 2 miles down Cabot Road from the planned site at the Mission Viejo Freeway Center at 25732 El Paseo. However, Mission Viejo documents show that Costco’s new location will be a 40-pump facility – gasoline only, with no retail space or convenience store. And yes, it’s just for Costco members.
The station will be constructed at a shopping center off the 5 freeway between La Paz Road and Oso Parkway. It’s a retail spot best known for South County’s lone Krispy Kreme doughnut shop. The plan includes demolishing a shuttered Bed, Bath & Beyond store.
City spokesman Robert Schick says the city approved the overall plans in March, with grading and building permits now being reviewed. Construction is expected to begin in the fall, with a planned spring 2026 opening.
No-brainer?
Now, selling fuel near one of the nation’s busiest freeways may seem like a no-brainer. But a gas-only location is an against-the-grain tactic.
We’d love to hear the “why?” from Costco. Sadly, the merchant doesn’t comment on store development plans.
Let’s consider industry data. Four out of five gas stations nationwide have a store, too. And while two-thirds of a typical gas-food-beverage store’s sales come from fuel, 60% of the profit usually comes from drinks, food, etc.
Gas-only stations buck two trends: the future of gas-powered vehicles and the higher profitability of non-gas sales. Airports are the spot where the gas-only station grew, because limited competition allows higher profits on fuel, says Jeff Lenard, spokesman for NACS, a trade group for gas-station operators.
David Hackett, an energy expert from Stillwater Associates in Irvine and a regular Costco fuel buyer, likes the gas-only idea. He says one reason California pump prices are so high is that the state has twice as many drivers for every gas station compared with the rest of the nation.
“I think Costco sees this new venture as an opportunity to serve their gasoline-buying members in a new way,” he says. “It will be successful because they are filling a need for more gas stations.”
Price matters
Costco may not need to attach a beloved food court to this Mission Viejo gas station because bargains on gas are a powerful lure.
“It gets people happier than just about anything in commerce,” says Lenard of NACS.
Ponder industry research showing 72% of gas buyers say price is the top motivation for where they buy, but that rises to 86% for shoppers of “big box” stores such as Costco.
“There’s a strong emotional caché with gas prices,” Lenard says. “Costco may be looking to tap into it” with the gas-only store.
Costco also seems to view southern Orange County as a laboratory, of sorts. There’s a car wash at the San Juan Capistrano location – 9 miles down the freeway from the planned gas-only location – one of only 15 nationwide offering that service.
And it’s not the only expansion in this area. Costco is planning a new store in Lake Forest, 10 miles north of the proposed gas station. That would be Costco’s 14th Orange County warehouse store, plus its business center in Westminster.
Curiously, designs for a gas station at the Lake Forest warehouse were dropped after the Mission Viejo plan was approved.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
