In 2026 Costco planned to open its first standalone gas station—not adjacent to one of its warehouse stores or any other Costco retail.
Costco had performed exceptionally well over the past 25 years. The company delivered strong returns to shareholders and created enormous value for customers. In addition, Costco treated its employees well, resulting in a remarkably low turnover rate. The company operated a membership model, whereby customers paid an annual fee to have the opportunity to shop in the warehouse clubs for items at discount prices. Moreover, the retailer created a treasure-hunt experience in which members enjoyed discovering new products. Customers proved very loyal, with the membership renewal rate equal to 90% in 2025.
Costco operated gas stations adjacent to most of its warehouse clubs. The new standalone gas station would be in Mission Viejo, California, a state where gasoline retailed at a high price. The case study provides an opportunity to evaluate this strategic decision. Students can evaluate the economics of the capital investment, as well as other considerations such as the potential for opposition by environmental activists. They can debate whether Costco should consider opening more such standalone stations.