How to Open a Convenience Store
The convenience store is the one-stop shop that busy Americans depend on to satisfy their cravings for snacks during their daily commutes and when they need to restock on those odds and ends between trips to the grocery store. It's an important part of the modern landscape, and it's one that isn't going anywhere any time soon. The market for the C-store remains strong, so if you're considering opening one, or if you're in charge of equipping a convenience store, we've got some tips to help make it a painless and profitable process.
Table of Contents
Deciding Whether to Franchise Your C-Store
The very first decision you need to make as you plan for your convenience store is whether you want buy into a franchise. Opening a franchise can be a sensible way to jump start your endeavor because it comes with automatic name recognition, access to marketing materials, on-site training, and other support from the company headquarters that should ease some of the uncertainties that arise in opening a business.
As attractive as it is, in reality, the biggest barrier to entry for a prospective franchisee is the initial startup cost. Franchisors typically ask for an initial franchise fee for the right to operate under their brand. There's typically a reoccurring royalty fee taken as a set percentage of your store's revenue, as well. Here's some data associated with opening common franchises that you should consider when you decide which path is right for you. The average investment represents the sum that a typical operator spends to get a new franchise off the ground.
|Franchise||Initial Fee||Royalty Fee||Average Investment||Source|
|7-Eleven||$10,000 - 1,000,000||Varies||$37,000 - 1,635,000||Franchisedirect.com|
|Circle K||$25,000||3.7-5.5%||$211,000 - 1,602,450||Entrepreneur.com|
|ampm||$35,000 - 70,000||5%||$397,409 - 7,786,848||Entrepreneur.com|
|Street Corner||$19,000 - 24,900||4.5%||$89,400 - 300,900||Entrepreneur.com|
If the costs of opening a franchise are outside of your startup budget, or if your entrepreneurial spirit is guiding you to strike out on your own, it's time to get to work on outfitting your own independent convenience store. This will give you the freedom to sell exactly the types of items that you want to and to do business on your terms, without the restrictions handed to you by a corporate franchisor.
To know what products you should offer, first understand who your neighbors are. Knowing how people spend their money will help you decide how you'll want to stock your shelves. The United States Census Bureau's American Fact Finder will help you understand the market you serve. Upscale shoppers will demand a different cross section of brands than working class folks, while there will be certain items and offerings from national brands that both will be expecting to find. When it comes to stocking your shelves with a core inventory, start with a directory of convenience store distributors. That resource will put you in touch with vendors who sell everything from cigarettes to deli meats.
Building a Convenience Store Food and Beverage Program
Packaged foods and commodity items will get many customers into your store for what they're looking for. And, while they're certainly staples of the C-Store scene and should never be neglected, packaged foods are not the only edibles that you should stock. More and more time-strapped people are heading to the convenience store for fresh meals - ones that are better tasting and perceived to be healthier. There are a few ways that you can incorporate fresh foods into your store's offerings.
Start with Simple Snacks
Baked items are a huge segment in the C-Store foodservice category, popular because they are easy to enjoy on the run. This includes morning favorites like muffins and bagels that pair well with coffee, as well as all-day favorites like pretzels and pizza. Any of those offerings can be baked fresh with a countertop convection oven. Whether you're baking your treats in house or sourcing them from a local vendor, they'll draw more attention when they're displayed in a well-lit bakery display case.
It holds true in convenience stores across the country - if there's one hot snack available, it's the hot dog. These are one of the most popular items and also one of the easiest to peddle, requiring little beyond a compact roller grill to get them on your menu. Some hot dog grills are designed to cook dogs, while others are only designed to keep them warm, so be sure you're your choosing the right one to fit your planned setup. Many have integrated bun storage to keep that essential companion item warm and soft.
Almost as popular as hot dogs to snack seekers are nachos. Nacho cheese and chili dispensers provide toppings from easy-to-replace bags, and those products can double as toppings for your hot dogs.
…Then Expand your Menu
The way to truly stand apart from the dozens of other C-stores along the highway is to offer your own unique foods that customers can't get anywhere else. With a few simple pieces of equipment, you can build a profit-producing menu that will get customers out of their cars and into your building.
A sandwich shop is one concept that's incredibly easy to integrate into a convenience store. A few pieces of simple-to-use equipment are needed if you buy your main ingredients pre-prepped. A sandwich prep table and other simple refrigeration equipment is just about all you need to enter into that market, and it's one that attracts a large cross section of the population, from laborers on their lunch breaks to time-strapped families headed to and from after-school activities. Incorporate a slicer and some prep tools to help shave costs and offer premium products.
The high speed oven is an emerging technology that's taking menus to heights many operators never thought possible. These miracles of foodservice equipment combine traditional cooking methods, often by pairing convection or impingement heating with microwave technology. This blends the best of both worlds to cook dishes faster and preserve the quality of the food better than either of those technologies alone. Chicken wings and pizza can be prepared in just a few minutes, while sandwiches can be browned on top and heated inside. Use one to offer those items and more cooked fresh to order.
Beverages for Your Bottom Line
At least as important as the food you're offering is your beverage program. Thirsty travelers often make stops just to grab drinks to take on the road, while other folks stop in for extra-large drinks to keep at their sides all during the work day. Convenience store beverages are often available at much lower prices per ounce than bottled drinks and they bring you some of the largest profit margins of all the products you can offer.
If you get one beverage right out of all the ones you can potentially offer, it should be coffee. Most American adults drink the stuff, and many of them buy it on the road. Consumers have grown pickier in recent years, developing a demand for diversity and an interest in coffee blends that have an origin story. Coffee distributors make it easy to buy blends with unique attributes and interesting origins, and with the right commercial coffee maker, you'll be able to do it justice.
Modern coffee equipment makes it simple to provide coffee for any number of customers and to keep up with unpredictable volumes of demand. The simple decanter brewer lets you make a pot at a time, while you can keep gallons hot, fresh, and ready to serve with airpots and insulated servers. When customers know that they can come to you for a hot, consistently-fresh cup of coffee, you've just expanded your following dramatically. Don't forget to consider adding an iced coffee machine to your lineup to serve those that prefer to drink their java chilled.
For a milder hot beverage, and one just as easy to offer, add a hot chocolate machine to your lineup. These machines are even easier to set up and maintain. They mix hot drinks from powder, so they're nearly labor-free once they've been filled. After that, just establish a cleaning and refill routine and let customers serve themselves. Many of those machines can dispense more than one flavor, so you can add cappuccino and latte drinks to your offerings.
If hot chocolate is the winning winter beverage, then the frozen drink is the summertime treat of choice. Slushie machines are another easy-to-set-up piece of convenience store equipment, and the product commands premium prices. Slushies are most commonly mixed from bag-in-box syrups and water from a plumbed-in source, requiring minimal attention from staff. Others are manually filled with syrup and water for each batch.
Location is Everything
Choosing a good location is critical to any prospective business owner, and that's especially true of convenience store operators. You might say that location is everything. Even if you do feature the cleanest restrooms, the coldest beer, and the freshest snack offerings in the city, chances are customers still won't go very far out of their way when they just need to make a quick stop on the way to work.
It's critical that your convenience store is in a location that's easy for people to get into and out of. This means located along streets with plenty of visibility. Major highways and interstate interchanges often provide some of the highest traffic counts for this type of business.The entrances and exits to your premises should be safe and visible. At night, your grounds should be well lit and clean. People think twice about getting out of their cars in a shady parking lot after dark.
Making it Legal
Before you even think about opening your business, you need to make sure to attain all the various licenses and permits required to legally operate a business in your locale. Some are common to any business and others will be unique to the categories you're selling. Prepared food, alcohol, tobacco, and other categories will most likely require a separate license. Other licenses will certify that your building is safe for occupancy and in a location that's zoned for commerce.
To find out which ones you need, start by calling your local chamber of commerce. They will be able to tell you which papers you need to file before you can plan your grand opening, and they'll more than likely be able to point you in the direction of other resources that can help you figure out how to start a convenience store. The U.S. Small Business Administration also has some information that can get you started.