Trying to launch a new liquor store without an airtight budget is like making an old-fashioned without the bourbon — it just doesn’t make sense!
Unfortunately, most business owners are blindsided by the costs and fees that come with opening a new liquor store. Additionally, new business owners must comply with a handful of legal requirements. In most cases, complying with these laws and regulations comes with a hefty price tag.
All of these costs and fees are enough to make any owner or manager pull their hair out!
So, how much does it really cost to open a liquor store?
In this article, we’ve identified some of the biggest liquor store expenses. By the end of this blog post, you’ll have all the information needed to budget for your new business.
How Much Does It Cost To Open a Liquor Store?
Opening a liquor store can cost anywhere between $50,000 to $250,000, especially if you have surprise expenses.
Having a clear understanding of liquor store costs and fees well in advance of opening your doors will help you budget and forecast appropriately. Creating an airtight budget with an accurate representation of your expenses is one indicator of a successful business venture.
Related Read: How Much do Liquor Stores Make?
The most crucial factor in planning for your liquor store costs is getting ahead of those “surprise” expenses. Having a clear understanding of what many liquor store owners end up spending down the line and learning from their mistakes gives your business an edge.
Your standard costs are going to differ from other liquor stores mainly because of your location.
Costs will vary depending on your state taxes and fees and the average price of inventory and real estate in your area. However, this article will give you a ballpark figure for each investment area.
1. Market Research
Before opening your liquor store, you want to be sure there’s demand for it in your chosen location. Market research, as part of a wider business plan, helps you understand your target customers and the competitive landscape. Use this information to make better decisions about your product mix, pricing, and marketing strategies.
Start with your target audience:
- Different age groups may have varying preferences. For example, younger adults might prefer craft beers, while older generations want traditional spirits and classic wines.
- The income levels of your target market influence how much they’ll be willing to pay for alcohol. Higher-income adults may be more interested in premium and luxury spirits, while those with lower incomes might prioritize value and affordability.
- Analyze the drinking habits of people in your potential location. Do they spend time in wine bars or craft beer establishments? Are they whiskey connoisseurs? Knowing the answers to these questions will affect your inventory and marketing costs.
Next, look at your competition:
- Evaluate your competitors' strengths and weaknesses. Which liquor stores are the market leaders? Why? Where do they excel? It could be customer service, product selection, or pricing.
- Analyze their product ranges and pricing strategies. What brands do they offer or focus on? Look at varieties and which promotions they run. What’s their pricing strategy?
Market research and analysis affect your startup costs in indirect ways. For example, depending on the alcoholic beverages your target audience prefers, you'll have higher or lower inventory costs. You’ll market differently to whiskey drinkers than craft beer enthusiasts. And, to stay competitive, you’ll need to price your products to turn a profit but not drive customers to your competitors.
2. Location and Property
You’ve done your market research and are ready to open your liquor store in your chosen location. What costs and fees can you expect?
Real estate costs are typically higher in prime locations with high visibility and foot traffic. Other factors that can impact real estate costs include the size of the space, the condition of the building, and the availability of parking or public transportation.
Related Read: Before You Open A Liquor Store, Consider These 6 Things First
Will you lease or buy your retail space? Leasing requires a lower upfront investment, but there will be ongoing monthly costs — and potential rent increases. Buying the property will cost more upfront, but there’s potential for long-term benefits such as building equity and potential appreciation.
3. Liquor License
Obtaining your liquor license is typically the first step in determining whether you’re allowed to open a liquor store in your area. Unfortunately, opening a liquor store comes with strict regulations regarding where and how you can operate.
Before doing anything else, we recommend obtaining your liquor license and getting the exact specifications of the type of establishment you qualify for and the locations you’re allowed to operate around.
Once you have determined you’re eligible for obtaining a liquor license by contacting your local governing body, you can submit your application. Some liquor license applications come with small fees, but the real cost is when you purchase the license.
Related Read: How To Get a Liquor License
Liquor licenses can range anywhere from $300 to $14,000, depending on your state. Although this license can be a significant cost, it’s one of the most essential costs to your operation, so you can avoid legal ramifications. Your liquor license also expires, so this is a recurring cost for your business every couple of years.
Related Read: The Ultimate Guide to Opening a Liquor Store
4. Business and Zoning Permits
Once you have your liquor license, the next step is to apply for relevant permits.
In many states, zoning and business permits are not permitted for liquor stores within a certain radius of schools or places of worship. These restrictions and zoning ordinances will give you additional paperwork and permit information to fill out compared to what the average business owner needs.
When searching for your state’s business permit costs, it’s crucial to know that the permit you’re looking for could be a business and/or zoning permit. The cost of business and/or zoning permits can range from under $100 to thousands of dollars in any state.
Once you apply for your business and/or zoning permits, your state’s Alcohol Beverage Control (ABC) board will review your application.
5. Inventory
Stocking your liquor store with a variety of products is a big investment. To cater to your target customers, you'll need a mix of alcoholic drinks, non-alcoholic items, and accessories.
The critical piece to inventory management is using inventory management software. Using a plug-and-play point of sale (POS) system that includes inventory management features eases the burden of inventory tracking.
The average liquor store inventory costs depend on your square footage and local inventory prices, but many stores spend upwards of $60,000 to 100,000 monthly on inventory.
If you would like more in-depth information about liquor store inventory management, check out our Guide to Liquor Store Inventory Management. In that guide, we cover common inventory problems, must-have inventory management features, pro tips for better inventory management, and insights into liquor laws and regulations.
6. Marketing and Advertising Costs
Marketing and advertising are some of the hidden costs of operating your liquor store. If your store is in an easily accessible area with a lot of organic foot traffic, marketing and advertising might not be a problem.
Alternatively, if your location is not ideal for foot traffic or you’re having trouble moving certain inventory, you might have to depend on marketing and advertising.
Creating a comprehensive marketing plan is the best way to avoid marketing and advertising becoming a surprise cost. It should include strategies for grand opening promotions, ongoing advertising, and customer loyalty programs. A well-executed marketing plan can help you build brand awareness, drive foot traffic, and establish a loyal customer base.
Marketing and advertising costs for liquor stores can easily exceed 7 to 8% of gross revenue, depending on your location, advertising needs, and advertising methods.
7. POS System
Inventory management is just one of the many benefits of using a POS system. Unfortunately, many POS system providers overcharge and underdeliver, leaving liquor store owners like yourself frustrated and planning for a new investment.
At POS Nation, we give you all the features and tools you need and nothing you don’t. If you have all the tools you need to run your liquor store, then that’s one less thing you have to worry about when it comes time to launch.
POS system features commonly used by liquor stores include:
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Reliable payment processing
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Case break inventory tracking and management
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Promotion management
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Mix and match bottle pricing
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Age verification features
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Dual pricing, also known as cash discounting
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Sales analysis and reporting
A POS system is the tool you need to build a profitable business — invest wisely.
RedBone's made the switch to POS Nation, and the results speak for themselves. How can we help you level up your liquor store business this year?
ANSWERED: How Much Does It Cost To Open a Liquor Store?
Opening a liquor store could be a highly profitable venture, but not without making a significant investment. The investment you’ll make depends on your location, the people you want to serve and their preferences, and startup costs.
One thing is for sure — you need a liquor store POS system to help manage your inventory, monitor sales reports, stay compliant with rules and regulations, and more.
POS Nation serves thousands of liquor stores, and our aim is to make your store profitable from the beginning. Find out how in our free webinar:
