Gas Station Giant ARKO Gives Up Control of 471 Stores

Drivers who have recently filled up or stopped for coffee at regional chains such as E-Z Mart, Fas Mart, Village Pantry, or Scotchman may be surprised to learn that major structural changes are taking place behind the counter.

As fuel prices remain far higher than many consumers would like, households across the country are tightening spending, which is hitting convenience store sales at the register.

The National Association of Convenience Stores (NACS) says lower-income consumers are cutting back on quick stops, reducing in-store transaction volumes nationwide. "Inside transactions were down 1.9% year over year for the first half of the year," said Chris Rapanick, managing director of NACS research, referring to 2025.

That decline matters disproportionately to convenience store operators because in-store merchandise—snacks, beverages, tobacco, and prepared food—typically carries significantly higher profit margins than gasoline, which often nets only a few cents per gallon after expenses.

At the same time, pump prices have risen sharply from a year earlier, adding pressure on both drivers and station operators. The national average for regular gasoline stood at $4.01 on Aug. 11, 2026, compared with about $3.14 during the same period last year, according to AAA.

To manage those pressures, parent company ARKO Corp., one of the largest privately held convenience store and fuel distributors in the United States, has quietly given up corporate control of more than 471 store locations over the past two years, shifting away from direct retail management and toward wholesale fuel supply.

ARKO, the company behind E-Z Mart, Fas Mart, and Village Pantry, exits 471 stores

ARKO Corp. recently reported second-quarter earnings showing revenue of $2.35 billion, up from $2.00 billion in the same period of 2025. The increase was driven by higher wholesale fuel supply volume and elevated fuel prices.

The company also said it converted 21 company-operated retail stores into dealer locations during the quarter, bringing the total number of converted stores to 471 since the launch of its "dealerization" initiative in 2024.

Under this model, ARKO transfers store operations, payroll, and inventory to independent dealers rather than running the storefronts itself. The company continues to collect rent and serve as the wholesale fuel supplier, reducing store-level costs such as labor and credit card swipe fees.

"Consumer demand softened during the second quarter as sustained higher fuel prices continued to pressure household budgets. Even so, our teams remained focused on the areas within our control, maintaining disciplined fuel and merchandise margins while continuing to deliver value for our customers. Importantly, our Wholesale and Fleet Fueling segments continued to perform well," said Arie Kotler, Chairman, President and Chief Executive Officer of ARKO.

Why ARKO is converting stores to dealerships

Management said in its SEC Form 10-Q filing that these locations are more profitable as wholesale dealer sites than as company-run retail stores.

"Conversions of certain retail stores benefit both our retail and wholesale segments, as these sites have yielded, and we expect will continue to yield, greater profitability once converted. In such cases, we realize higher profit from ongoing fuel supply agreements and rental income than from continued operation of these stores in our retail segment," the company disclosed in the filing.

ARKO said the conversions also allow it to focus investment more efficiently across its remaining retail stores.

In its 2025 annual report, the company said, "This channel optimization strategy is delivering tangible benefits, including reduced operating costs, lower maintenance capital requirements, and improved cash flow. By focusing on core locations and leveraging our wholesale network, we are enhancing returns while creating a more efficient base of stores."

ARKO is not alone in facing this pressure. Convenience store consolidation has intensified across the industry as smaller and mid-size operators struggle to keep pace, according to Dennis Ruben, executive managing director at c-store advisory firm NRC Realty & Capital Advisors.

"Unless somebody's got a company with a succession plan or a family member that wants to keep in the space… frankly, there's a lot of incentives for somebody to sell right now," Ruben told C-Store Dive.

ARKO says the strategy is working as card fees rise

One reason some operators are shifting store-level financial responsibility to independent dealers is the rise in transaction costs.

Although direct store operating expenses, including wages and benefits, card fees, utilities, maintenance, and merchandise, increased 4.2% at the slowest pace since the pandemic, credit and debit card fees reached a record $21.3 billion, according to NACS' April report.

ARKO said the strategy is already lowering costs. Second-quarter site operating expenses fell by $16.6 million, or 9.4%, compared with the same period in 2025, driven by "$25.8 million of reduced expenses related to retail stores closed or converted to dealer locations."

That decline was partly offset by "an increase in same-store operating expenses of $8.3 million, or 5.6%, primarily due to higher credit card fees associated with elevated fuel prices, insurance, personnel costs and rent."

During the company's second-quarter earnings call, Kotler said around 70 additional stores are set for conversion or have already been converted since the quarter ended.

"Each conversion moves us further towards a lower cost, more capital efficient operating model with stronger cash flow characteristics. While the pace of conversion moderated this quarter, our expectation for the program remained unchanged," Kotler said.

What ARKO's exit from 471 stores means for consumers

ARKO says it is already seeing benefits from the transition, but converting company-operated convenience stores into dealer locations can be complicated and may not suit every company.

For example, retail giants such as 7-Eleven and Alimentation Couche-Tard, the parent of Circle K, use both models, while CrossAmerica Partners is converting dealer-operated locations into company-operated sites.

Experts say each approach has advantages and drawbacks. C-store consultant Julie Jackson said converting a large number of stores "could be a huge organizational realignment that has to happen."

"This strategy also brings the risk of getting into business with a franchisee or dealer who mishandles operations or doesn't comply with the agreement," Jackson told C-Store Dive.

When a company moves from company-operated stores to dealers, headquarters gives up direct control over store employees, branding execution, and proprietary product programs, all of which can affect the customer experience.

In addition to changes in loyalty programs and possible brand inconsistency, dealers have the right to set their own final pump prices. That means the company whose sign is on the canopy, such as Shell, BP, or E-Z Mart, is often not the one setting the local fuel price; the dealer is.

"In contrast to corporate-owned stores, franchised stores typically carry shelf prices anywhere between 5% and 20% more expensive than their counterparts (Humphrey 2007). This is partially due to the inability of franchise stores to achieve economies of scale," according to an exploratory study on store image in a franchise setting.

This story was originally published by TheStreet on Aug. 11, 2026, where it first appeared in the Retail section.