One profitable gas station business

Everyone of us has been into a gas station knows that gas stations make money by selling gas and diesel. That is their main business that requires large investment. However, something else can be more profitable than this. Rarely people would be aware of this until Bank of America announced the latest cost cutting plan.

BofA plans to discontinue lease contracts with about 1,600 gas stations and malls for their ATM machines in these stations. To install an ATM in a gas station, the bank needs to rent the space and communication lines. How much the cost of installing an ATM? It is surprisingly costly: $1,700 per month. It is hard to image an ATM would cost much more than a one-bedroom apartment. That is totalled $32 million for 1,600 ATMs. Also consider how much business would be brought to BAC by these machines, it is definitely necessary to shut them down.

BofA has the second largest number of ATMs in major banks with about 16,000 ATMs. JP Morgan has about 18,000 ATM national wide. Wells Fargo has about 12,000 and Citi Bank has 10,000. ATM in branch would cost 40% less compared to the ones installed in other properties.

This new round of cost cutting at BofA aims to make the bank more profitable. It has achieved some success by selling properties such that their Q2's numbers aren't that bad. With relentless cost cutting efforts, BofA will become leaner, hopefully more focus on retail banking. Buffet said he hoped Wells could have 40% of mortgage market. The dominance is built on long term business built up. Same should be done at BofA's retail banking business. It seems BofA has realized this and moved on this track.