Source: Blog – Alliance for American Manufacturing

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The big gas stations-turned convenience stores have a devoted following. But subsidizing retail only goes so far.

A big rig hauling Chinese-made consumer electronics for Amazon makes its way north along I-45 in East Texas. The underpaid driver, in the middle of a two-day shift, is bleary eyed and his joints ache. He needs a coffee and a sandwich and to stretch his legs.

Then he sees the sign. The cartoon beaver. And you know what that means:

Texas loves Buc-ee’s and, increasingly, America loves Buc-ee’s too. No longer just a mainstay of highway travelers in the Lone Star State, the chain of behemoth gas stations is branching out. They’re already all over the Southeast; more are planned in Virginia and Ohio. Another is planned for an empty stretch of land abutting the highway north of Madison, Wis.

Now, while I like a good rest stop, I’ve admittedly never been to one of these places. So I quizzed some friends who have. All were left impressed; some stupefied.

“The first time is very overwhelming,” said one. “There’s a real fear of missing out, because there is so much to take in and more to experience than you possibly could in one trip. More of a destination than a gas station. The first one I went to had 144 gas pumps. And the bathrooms are so clean!”

“Its soda fountain is off the chain. There are probably 50 different beverages, including many in-house flavored sugar waters,” said another. “The beef jerky selection is unreal. Over 100, maybe 200 varieties? And it’s got a real barbecue restaurant, too.”

“It’s total chaos inside,” said a third. “Families, kids, workers all milling about like those Koyaanisqatsi movies. It’s mega-huge to the max.”

And that might not be an overstatement. The Buc-ee’s outside Lulin, Texas, is more than 75,000 square feet – considerably larger than a football field. The car wash at a location outside Houston claims to be the world’s longest car wash with “255 of conveyor.”  Not all of them are that big, but you get the idea: This chain is Texas-sized.

As such, the arrival of a Buc-ee’s is no small thing for the often rural and revenue-starved locations they target. The company is privately held, so specifics about how much business it does is not entirely clear. But a new store means thousands of customers a day, which means more than a significant bump in tax local revenue. Its jobs pay relatively well. And so, as the 40-year-old chain has embarked on this expansion campaign, it’s been able to leverage its popularity into tax breaks and infrastructure improvements from the municipalities eager to draw it in.

But what kind of return do tax breaks for a retailer – even one with a following described as cult-like – really get these local government?

Manufacturing, by comparison, returns almost $3 in economic activity for every dollar spent on it, according to Pentagon officials, who are eager to encourage a healthy domestic industrial base.

Another study found every factory job supports 1.6 others – so, every 10 factory workers mean 16 jobs nearby in services and retail. The Economic Policy Institute has the number much higher; So what does retail – like a gas station that could double as an enclosed shopping mall – get you? According to EPI’s research, not nearly as much.

Businessweek profiled the company last month and asked that question too:

That a retailer should get tax breaks is not entirely novel, even if the small towns courting Buc-ee’s have generally limited them to industrial companies. Greg LeRoy, executive director of union-backed incentives watchdog Good Jobs First, says outdoor sporting goods giants Bass Pro Shops and Cabela’s, which merged in 2017, have been successful in wrangling incentives.

Retailers, however, don’t normally generate the same kind of economic activity that factories and office parks do, often importing their merchandise and using fewer local technology and utility services, LeRoy says. “Subsidizing retail never makes sense unless you’re bringing food retailing to a food desert,” he says.

America likes clean rest stop bathrooms, not to mention barbecue, open gas pumps, and jerky. It’s hard to argue that Buc-ee’s is extremely good at delivering those things. Its arrival at a local bypass, however, does not portend wider economic development for the communities that subsidize it.   

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