Nothing ventured, nothing gained, right?
Opening a convenience store can be a very profitable business venture, but it comes with several start-up costs.
In this guide, we'll break down all the expenses associated with opening and running a convenience store, so you can make an informed decision about whether this is the right business for you.
We'll cover everything from startup costs to day-to-day expenses, so you have a complete picture of what to expect.
Let’s dive in.
Let’s answer the big question straight away: It costs anywhere between $50,000 and $600,000 to open a convenience store.
Why do those initial costs have such a wide range? Because there are so many variables involved, such as:
With this type of investment, careful financial planning is essential. You need to be clear on what it will take to create a profitable business, how much money you are borrowing, and how to price your inventory to both make sales and earn enough profit.
Here’s a deeper dive into the seven costs you need to consider when opening up a convenience store:
As the saying goes, “Location, location, location.” You want a convenience store location with high foot traffic, low competition, and favorable traffic patterns.
But how much will you need to invest to be in an area that gives you all three? Or at least two? The better the location, the higher the prices. Size and the condition of the property are also key aspects that will affect the price of your store’s location.
Real estate prices vary widely, but we’ll offer some examples to give you some general numbers to consider. The average commercial rent in the U.S. is about $29 per square foot/year, but can be as low as $10 or as high as $50 in more urban, high-traffic areas.
To understand how that translates to rental costs, we’ll follow this equation:
The average size of a convenience store is between 1,800 to 2,500 square feet. Here’s what monthly rent could look like for a convenience store of 2,100 square feet, depending on the cost per square foot:
And don’t forget about deposits, which are typically equivalent to one month’s rent.
There are several licenses and permits you’ll need to operate your store legally.
These costs can vary greatly by state, so here are some average or general numbers to work with:
Operating costs are any expenses that your convenience store incurs on a daily basis to continue operating. These are things like:
Creating a budget and leveraging the reporting on your point of sale system will help you identify areas you can increase or decrease spending.
Start with the basics on equipment, and be particularly focused on the equipment that allows you to provide the beverages, snacks, and hot food that are big sellers for convenience stores.
You’ll also need equipment for any storage areas, walk-in coolers, and employee-only areas.
Here are a few of the costs for typical convenience store equipment (these are ballpark ranges, not exact):
Drink dispensers
Refrigerated display cases
Open-air coolers
If you’re taking over an existing store, don’t assume that all of your equipment is ready to use. Give fridges and all food serving equipment a thorough once-over to ensure it’s safe to use.
You’ll need insurance for your convenience store for several reasons.
First, you may need general liability insurance just to get your business license (depending on your state and city regulations). But you’ll also need it in the event a customer files a lawsuit against you.
The price range of a standard $1 million general liability policy can range from $57 to $89 per month, depending on your location, services, sales, payroll, and experience.
Related Read: How Much Is Small Business Insurance? Here's Our Breakdown
Second, since you’ll have employees, you’ll need workers’ compensation insurance to hire and have employees working for you. Given that the average cost of a workers’ compensation claim is $40,000, having insurance is also a way to protect your business.
For small businesses like convenience stores, $50 to $70 per month is a good number to plan with for workers’ compensation insurance.
And finally, you need insurance in place to protect the thousands of dollars worth of inventory and equipment in your store.
Inventory will be one of the biggest startup costs for your convenience store. It can cost as much as $50,000 to stock a convenience store.
However, this is another cost that can fluctuate greatly based on a few variables, such as:
When selecting your initial inventory, start with a mix of reliable staples. Then, use the sales reports from your POS system to see what’s popular and refine your product list over time.
There may be no more important piece of equipment for your convenience store than your POS system.
From processing transactions and recording sales data to managing inventory, helping you segment customers for promotions, and employee management functions, your convenience store POS system unites your operations in one piece of equipment.
Outdated POS systems make your job harder in the long run:
That’s why it’s crucial to invest in a modern POS system. But what will it cost you? When evaluating convenience store POS system costs, consider the costs of your hardware (such as a touchscreen terminal, receipt printer, scanner, and cash drawer) and the software itself.
On the software side of things, subscription POS software is the norm, with most vendors in the $49 to $150 per month range.
As you can see, there are many factors to consider when opening a convenience store. You need to determine your budget and then decide how to use it best. Costs can spiral out of control if you’re not careful and don’t have a plan.
Once you have a location, inventory, and equipment purchased, you should look at POS systems. Remember, the ideal point of sale solution will make managing your convenience store’s operations smooth and easy.
POS Nation specializes in matching small business owners with the industry-specific tools they need to reduce costs, stay competitive, and win customers.
Download our free Convenience Store Point of Sale Buyers’ Guide to make an informed purchase decision or talk with one of our convenience store experts today.