5 Hidden Costs of Scaling to Multiple Liquor Stores

Business is booming. New customers are rolling in. Cash flow is consistent and healthy. 

For many store owners, this is the moment they’ve been waiting for — a chance to expand their business and open a new location. 

But running one liquor store and running multiple locations are very different beasts. Some store owners rush into opening their next location without factoring in all of the costs, and end up struggling to keep the new location afloat.

In this article, we’ll cover five hidden costs that are easy to forget when scaling your business, along with a few tips to set yourself up for success.

1. Time

While not a direct monetary cost, most owners forget how much time it takes to set up a new location. From overseeing renovations to laying out shelving to implementing a new point of sale (POS) system, a new store will take up a lot of your attention.

Many store owners and managers budget for costs, but a surprising number don’t budget for time. As a result, key operations in your original location fall behind or get overlooked. If you spend all of your time putting out fires in both locations, both stores suffer.

When opening a new location, create a schedule and ensure you have staff ready to support you while the new store is being set up. 

2. Split Inventory & Store Monitoring

Your liquor store management system may get by if you have one store, but many store owners find that using the same software for multiple locations doesn’t cut it. Without a modern POS system, it’s infinitely harder to track inventory, employees, and store performance across locations.

Opening a new location may involve updating your technology for both the old and the new store.

Here are the essential features of a liquor store POS system to look for if you plan to run multiple stores:

• Cloud-based: Monitor sales and update inventory at any store from any location or device. This allows you to keep an eye on your stores without physically going to different locations.
• Consolidated inventory management: Manage and view inventory for multiple locations, so you can quickly make updates or assign inventory transfers.
• Variable tax rates: Set the appropriate tax rates, bottle deposits, and other fees based on the store’s location, while maintaining a combined inventory.
• Detailed reporting: See how each business performs individually and altogether. Each will have different profit margins, customer preferences, and more.

Updating your POS system might seem stressful, but updating your technology will likely benefit all of your locations. By running a POS system made specifically for liquor stores and multiple locations, you can make your store processes consistent between stores and scale your business more easily.

Related Read: Multilocation Liquor Store Management: Can Your POS System Handle It?

3. Marketing & Lack of Brand Recognition

In the excitement of opening a new location, you might forget about the struggles of opening your first store. Business may be booming at your first location, but that doesn’t guarantee that your new location will be instantly successful — especially if you’re taking over an existing business.

For the first six months or so, you need to put extra time and money into marketing the new store. The effort will likely equal or exceed what it did the first time, and it’s important to budget this into your financial plans.

Here are some extra tips for successful multi-store marketing:

• Don’t copy and paste your marketing communications. The customers at one location, even a nearby one, won’t necessarily like or want the same things. Take time to learn about the demographics and preferences at each store and market them appropriately.
• Ensure customer loyalty works across locations. Customers should be able to earn points no matter which location they shop at. This also gives you consolidated customer sales history for all locations.*
• Create a consistent look and feel across locations. Take advantage of your brand recognition by using similar colors, signage, and displays at your new store.
• Highlight your new locations’ unique offerings for existing customers. In addition to advertising your store to new customers in the neighborhood, highlight any unique selections that are only available at the new location to entice existing customers.
• Update your website and business profiles. Make sure to create a new Google Business Profile and update your website with information about the second location — this way, your new business shows up higher in online searches.

*Bonus tip: If you have customers who frequent multiple locations, see if there are consistent differences between the types of items they buy at one location over another. This helps you further carve out each store’s niche.

Related Read: 4 Components of an Effective Liquor Store Business Plan

4. New Tax & Licensing Requirements

We don’t need to tell you that figuring out the correct tax and license requirements for a liquor store is… complex. The bad news? When you open multiple locations, it gets even more complex.

Because liquor laws vary by state, county, and even city, you can’t assume that the liquor license requirements, zoning laws, and tax rates will be the same. Failure to do your homework can result in opening delays or an unexpected tax bill. 

Before you put money down on a new location, ensure you have a firm understanding of any legal needs. Once you’re open, it’s important to make sure you apply the right tax rate to alcohol sales. 

Here’s the good news: Modern POS systems, especially those built for liquor stores, can apply the correct tax rate automatically based on the sale location. This simplifies your inventory updates and ensures your tax payments are correct.

5. Staffing & Training Costs

Great employees are key for a thriving liquor store. Unfortunately, you can’t clone your existing employees into the new location — and you don’t want to spread your employees thinly between locations.

In other words, you have to do some hiring — and you need to budget time and money for hiring and training new staff. Create a gameplan for which existing employees or managers you want at the new location and which roles need to be filled.

Even if you don’t know exactly what foot traffic will look like or what employees you’ll need, it’s better to think about staffing early, rather than panicking and hiring in a rush.

Here are more tips to keep your staffing costs down:

• Find a few managers and employees willing to work at the new location, at least in the short term. It’s easier to train new employees by having some experienced staff on hand.
• Use the same POS system between locations. A single system for all stores ensures that employees can be trained faster and work at multiple locations without confusion.
• Start hiring early — don’t wait until you’re weeks before opening. There’s a lot to do when you open a new location, but don’t let staffing slip through the cracks. It’s better to take extra time to hire one great employee than to waste time on quick hires that won’t stick around.
• Budget for new staff members as part of your opening costs. Some store owners don’t factor in new employees as part of their new location costs — but you should. This helps you understand what kind of revenue you need to generate to keep the new location open.

Friendly and knowledgeable staff are a huge part of what makes your new store a success — so don’t skimp on staffing costs.

Set Your Expansion Up for Success With a Multi-Store POS System

Expanding to a new location is a huge step forward, and you should be excited! But it does have its risks.

By factoring in these hidden costs, you can mitigate those risks and open with confidence. Many of the biggest hurdles in multilocation management are solved with the right technology in place.

At POS Nation, we’re passionate about matching small specialty retailers, like liquor and wine stores, with the industry-specific tools they need to thrive and grow. To get an instant quote for a new multilocation liquor store system, try our easy Build & Price tool.