The news: Costco plans to open a standalone gas station next spring in Mission Viejo, a city in Orange County, California.

The 40-pump station, which will be the membership club’s largest to date, will be about two miles from two existing Costco warehouses—one of which already has a gas station.

The context: Inexpensive gas is a key component of Costco’s value proposition, driving both loyalty and traffic. The retailer operated 719 gas stations at the end of last year, generating about $30 billion in revenues—around 12% of total net sales, per the company’s annual report.

• Looking to expand this revenue stream, Costco has recently taken steps to make fuel access more convenient. It extended its gas station hours, with most locations opening at 6am daily and closing at 10pm on weekdays, 8:30pm on Saturdays, and 7:30pm on Sundays.
• It also increased the cash-back reward on gas purchases for its credit card holders to 5%, up from 4%, and sweetened cash-back rewards for executive members.

The benefits: These changes are already paying off—Costco recently recorded two of its highest-ever weeks for gallon sales in the US.

A standalone station could provide further benefits by easing congestion at pumps located adjacent to Costco’s warehouses and improving access for members who value convenience.

Our take: Costco is investing in ways to reinforce the value of membership, and fuel is central to that equation. If this off-site station succeeds, it could set the stage for a broader rollout of standalone locations—especially in high-traffic markets. The move could also prompt rivals like Sam’s Club to follow suit as competition in the warehouse club space heats up.