Who are the Berri Brothers and why is their gas so cheap?

Tucked among a legion of cheap gas stations with familiar brands like Arco, Costco and Valero, a new name has emerged: Berri Bros.

The Irvine-based company isn’t new; it’s been around for 40 years, founded in 1976 by the Berri family in Westminster. The company has grown to 70 employees and 10 gas stations in Orange County and one in north San Diego County.

In 2010, the family opened its first gas station with the Berri Bros. name. Their logo might seem familiar to baseball fans, but Tarek Berri says the Boston Red Sox resemblance was purely accidental.

In a short amount of time, the gas stations, found mostly in north Orange County, have drawn attention for routinely low gas prices.

On Monday, the Berri station in Sunset Beach had regular grade gas listed for $2.45 a gallon, 39 cents below the county average of $2.84.

Low crude oil prices resulted in the lowest winter gas prices in years. Prices in recent weeks have been running more than 50 cents below prices a year ago.

The Berri Bros. gas stations all assumed locations of existing brands such as Arco or Chevron. Tarek Berri and his uncles, who run the company, found that keeping the stations independent of national brands allowed them to secure gas for less because they don’t have to pay franchisee fees.

Those cheap prices lure customers, who are likely to use the money saved on gas inside the station’s convenience store.

“We’ve always been volume-driven,” Berri said. “We like to keep our locations busy, and lowering the cost does that. We can then focus on our convenience stores and car washes.”

Focusing on in-store sales is a growing trend among gas stations.

“Gas stations don’t make a lot of money off the actual gas sales,” said Gas Buddy petroleum analyst Allison Mac. “Most of their profit comes from the convenience store sales.”

She added that a lot of brands offer discounts to people using cash to buy gas, knowing that while customers are in the store paying for the gas, they’re more likely to buy other goods.

Stores like Costco, which are also known for cheap gas, follow a similar model.

“A lot of branded and independent store owners are lowering the price to get more foot traffic,” Mac added.

Stores that are located in high-traffic, convenient areas, do not need to have prices as low, but for other stations it is a way to drive sales.

Berri Bros. gas stations make roughly 7 cents in profit per gallon of gasoline sold, while other stations make closer to 30 cents, Berri said. He operates at a lower profit margin to drive people into his stores.

The company is looking to move away from smaller convenience stores found at some of their gas stations to larger models such as 7-Eleven gas stations.

The company recently partnered with 7-Eleven at four stations, including one in Anaheim.

It hasn’t all been smooth sailing for the Berri Bros. though. The company six years ago weathered significant and costly changes mandated by the state.

In 2009, during the height of the recession, some 51 independent gas stations in Orange County had to install new gas-dispensing nozzles that reduce vapor emissions that cause smog, a requirement by the California Air Resources Board.

The new nozzles cost around $11,000 each. Berri estimated the upgrades cost $100,000 per location.

Contact the writer: hmadans@ocregister.com or Twitter: @HannahMadans

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