Costco is taking a bold step in the fuel industry by launching its first-ever standalone gas station. This new venture represents a significant shift from its traditional model, where gas stations are typically adjacent to its warehouse stores. Located in
Mission Viejo, California,
this station will focus solely on providing fuel, without the usual retail store amenities like the famous
$1.50 hot dog or rotisserie chicken.
This strategic move aims to enhance customer convenience and streamline operations.
The new station in Mission Viejo will be the largest in
Costco
‘s portfolio, featuring 40 pumps. It is being constructed on the site of a former Bed, Bath & Beyond store, approximately 3.2 kilometers (2 miles) from an existing Costco warehouse with a traditional gas station. This location choice reflects Costco’s commitment to expanding its fuel business while maintaining proximity to its loyal customer base. The city of
Mission Viejo approved the plans in March,
with construction set to begin in the fall and an opening scheduled for spring 2026.
Access to the 40 pumps will be exclusive to Costco members, who will need their membership information to fuel up. Memberships cost
$65 for Gold Star or $130 for Executive annually
. The station will operate from 5 a.m. to
10 p.m. daily,
ensuring ample opportunity for members to fill up. Costco employees will supervise the operations, maintaining the high standards of service that members expect. This exclusivity is designed to enhance the value of Costco memberships and attract more customers to its fuel offerings.
Gasoline has been a cornerstone of
Costco’s business model
since it opened its first service station in 1995. By the end of 2024, fuel sales accounted for approximately
12% of its global net sale
s. Despite the lower margins compared to other products, cheaper gas is a major draw for members, alongside the 5% rewards for credit card holders. The introduction of standalone stations could help alleviate congestion at existing warehouses, which often face crowded parking lots and long lines at the pumps.
Costco has been expanding the operating hours of its gas stations across North America to make refueling more convenient. By keeping stations open an hour later and opening earlier, Costco has achieved two of
its highest-volume weeks ever.
As of late 2024, the company operated over 700 fuel stations worldwide. Additionally, Costco is exploring electric vehicle charging, partnering with
Electrify America to install hyper-fast chargers at five locations,
further diversifying its energy offerings.
This initiative is seen as a bold step and a growing investment in its gas station business, posing a greater threat to traditional convenience retailers. The new station will compete directly with Circle K, Chevron, and BP sites on the same street. Mission Viejo’s mayor, Robert Ruesch, anticipates that the station will attract thousands of drivers. Costco is not alone in this focus; Walmart, for instance, opened its 400th gas station by the end of 2024 and plans to reach approximately
450 locations by the end of 2025.
Retail analyst
Neil Saunders
suggests that if successful, this model could be implemented in other locations, indicating potential for future expansion. Costco’s move into standalone fuel stations could set a precedent for other retailers, highlighting the importance of innovation and adaptation in the competitive fuel market. As Costco continues to evolve its business model, members can look forward to more convenient and cost-effective fueling options.
