Nothing ventured, nothing gained, right?
Opening a convenience store can be a very profitable business venture, but it also comes with a number of 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.
So, whether you're just starting to explore your business options or you're ready to take the plunge into owning your own store, read on for our comprehensive cost breakdown and all the information you need.
How Much Does it Cost to Open a Convenience Store?
Let’s answer the question straight away: it can cost between $50,000 and $100,000 to open a convenience store.
Now, it can also be higher or lower than that because of the variables involved, such as:
- Initial inventory - the size, quantity, and quality of items you want to stock.
- Rent, deposits, or purchase price of your store - the size of your store, its location, condition, and desirability all affect the rental or purchase price.
- Equipment - this is everything from POS systems and coolers to shelves, displays, drink dispensing machines, and more.
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 are the seven costs you need to consider when considering opening up a convenience store:
1. Location
As the real estate 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, fuel pump stations, 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. We’ll follow this equation:
Yearly price per sq. ft. x square feet ÷ 12 months = monthly rent
In 2019, the average size of a convenience store was 2,425 square feet. Here’s what monthly rent could look like for a convenience store of that size if the yearly price per square foot is…
- $10: $10 x 2,425 ÷ 12 months = $2,020.83 per month in rent
- $15: $15 x 2,425 ÷ 12 months = $3,031.25 per month in rent
- $20: $20 x 2,425 ÷ 12 months = $4,041.67 per month in rent
And don’t forget about deposits as well, which are typically the equivalent of one month’s rent cost.
2. Permits and Licenses
There are a number of licenses and permits you’ll need to operate your store legally. These costs can vary by state, so here are some average or general numbers to work with:
- Business license: $50 - $200 (plus annual renewal fees)
- Occupancy permit: $477 (national average, but can range from $150 - $1,500 or more)
- Alcohol/liquor license: $1,407 (national average, but can range from $100 to $13,800 depending on your state)
- Tobacco license: $25 to several hundred dollars depending on state, your convenience store’s location, and the month issued
- Lottery retailer license: typically $25 in most states; depending on your state, you may need to also carry a surety bond valued at $15,000 that costs $10 - 15 per thousand dollars of coverage ($150 - $225) every month
3. Operating Costs
Operating costs are any expenses that your convenience store incurs on a daily basis to continue operating. These are things like inventory (we’ll dive deeper into that below), wages, payroll taxes, utilities, healthcare insurance, card processing fees, repairs/maintenance, supplies, and more.
You’ll need a budget and robust reporting to see where you can increase or decrease spending. Your point of sale system can help with some of this reporting, showing you overall sales and financial reporting.
4. Equipment Costs
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 (ball park ranges, not exact):
Drink dispensers
- Frozen drink machine: $970 - $19,950
- Juice dispensers: $680 - $3,700
- Coffee & hot chocolate machines: $600 - $3,150
- Iced coffee dispenser: $2,500+
- Soft drink dispenser: $2,100 - $24,000
Refrigerated display cases
- Single-door swing cases: $1,000 - $2,700
- Double-door swing cases: $3,400 - $5,000+
- Sliding door cases: $2,600 - $7,000+
Open air coolers
- Vertical: $1,900 - $31,000
- Horizontal: $3,700 - $30,400
- Undercounter: $8,300 - $12,400
5. Insurance
You’ll need insurance for your convenience store for a number of 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.
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, it’s also a way to protect your business.
For small businesses like convenience stores, $50 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.
6. Inventory
Inventory will be one of the biggest startup costs for your convenience store. According to the Small Business Chronicle, it can cost as much as $20,000 to stock a convenience store.
However, this is another cost that can fluctuate greatly based on a few variables, such as:
- Number of products you need to stock
- Product selection - basic to premium level snacks
- Wholesale financing (Costco, etc.)
- Prices for goods by region
7. Point of Sale (POS) System
There may be no more important piece of equipment for your convenience store than your point of sale, or 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:
- Inventory management is more difficult using spreadsheets
- Employee management and payroll is cumbersome when done by hand
- You can’t get all the data you need to improve customer service
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, you have to look at what it costs for your hardware (touchscreen terminal, receipt printer, scanner, cash drawer, etc.) and the software itself.
For hardware, it depends on the number of registers you’ll have. For example, POS Nation offers a convenience store POS hardware bundle for $999 that includes:
- All-in-one 15” touch terminal
- Thermal receipt printer
- Barcode scanner
- 16" point of sale cash drawer
- 24/7 support, training, and programming
On the software side of things, subscription POS software is the norm, with most vendors in the $49 - $99 per month range.
How Much Does it Cost to Open a Convenience Store? It Depends
As you can see, there are many factors to consider when opening a convenience store. You need to determine your budget and then decide on how to best use that budget. 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 can provide all of your point of sale needs and equipment. We have the best solution purpose-built with your unique business and industry in mind.
Download our free Convenience Store Point of Sale Buyers’ Guide to make an informed purchase decision.
