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Convenience stores are everywhere — they’re tucked into city blocks, perched on corners in small towns, and located next to shopping centers in suburban areas. How do all these businesses thrive? The value proposition is right there in the name: It’s all about convenience. Customers love the ability to pop in and pick up a few items, all without the hassle of navigating a full-size grocery store.

If you’re looking for a new business idea, a convenience store could be a profitable option. After all, there’s always a market for household goods and grocery items. First, however, it’s important to understand how the process works.

The pros and cons of owning a convenience store

The American convenience store market is booming. In 2022, it was worth a staggering $43.4 billion — nearly four times the value of the fine dining market, which came in at $11.5 billion. What’s more, the industry has been growing by an average of 4% annually since 2017. Given these figures, now could be a great time to learn how to open a convenience store business.

As with any new venture, being a convenience store owner comes with both pros and cons. Before you draw up a business plan, it’s important to decide whether the advantages outweigh the drawbacks for your location and personal situation.

Pros of opening a convenience store

  • Freedom to be your own boss
  • Control over work environment and employee management
  • Lower startup and operating costs than a large grocery store
  • Opportunity to become an integral part of a neighborhood
  • Chance to create jobs for locals

Cons of opening a convenience store

  • Success requires a thoughtful, detailed business plan
  • Long hours, especially before you hire employees
  • Challenging inventory management for fresh grocery items
  • Can be physically demanding
  • High overhead expenses for a small business

How to successfully open and run a convenience store

As with any brick-and-mortar business, it takes a great deal of advance planning to figure out how to open a convenience store. By taking the time to write a business plan, do your due diligence, and ensure compliance with local laws, you can build a strong foundation for future success.

Determine the right business model

There are a few common ways to open a convenience store business.

  • Purchase an existing business. If time is a priority, this is often the fastest option — assuming you can find a store for sale in your target market, that is. You won’t need to worry about searching for properties, and the business will likely come with an existing customer base and supplier network. However, costs may be high, especially if you’re purchasing the store’s inventory.
  • Open a franchise. As a franchise owner, you benefit from the chain’s established brand awareness and trust. This familiarity goes a long way with customers; it can reduce any hesitation they might have about trying a new store. Franchise agreements typically come with support for finding properties, getting inventory, and marketing your store. On the flip side, you can expect to give up a certain amount of control over product selection, branding, and store design. You’ll also pay a percentage of revenue to the parent company, which reduces your profit margins.
  • Start an independent convenience store. This strategy gives you complete control over every aspect of the business. That freedom comes with drawbacks — you’ll be solely responsible for negotiating a lease or sale agreement, finding vendors, acquiring permits and licenses, hiring employees, and promoting your small business.

Once you determine the best route for you, it’s time to write a business plan. This document lays out the goals of your convenience store and how you plan to achieve them. At a minimum, it should cover the company’s unique selling proposition, organizational structure, product overview, operations, estimated costs, legal structure, market analysis, marketing plan, and financial projections.

The convenience store industry is changing; your business plan should also follow relevant business trends that are driving customer behavior. Take grocery delivery, for example — nearly half of Americans shop for groceries online. By adding delivery services to your business plan from the beginning, you can attract tech-savvy customers and beat out less-advanced competitors.

Why is a business plan so important? First, it forces you to think critically about every aspect of the operation — that way, you can identify and address problems before you take meaningful action. A detailed business plan can also help you find investors; they’ll assess it closely to determine potential profitability.

Need help getting started? The Grubhub for Restaurants business plan template provides a useful framework, whether you’re opening a small convenience store or a larger operation with a gas station.

Choose a central location

Location can make or break a convenience store business — after all, “convenience” is right there in the name. Customers should be able to pop in and out quickly any time of day.

The ideal location varies based on where you live. In an urban area, your store’s entrance must be highly visible and accessible from the sidewalk. Avoid dark side streets; instead, look for busy, brightly lit spaces that make customers feel confident.

If you’re running a small business in a rural area or small city, choose a car-friendly property in a high-traffic part of town. Make sure the property is easy to see from the road, and ensure customers can enter and exit the parking lot easily.

Do you have a specific demographic in mind? Pick a location that’s popular with your target audience. If you’re planning to sell to truckers, for example, you’ll need to choose a spot near a major highway. If your ideal customers are local professionals, a location in the central business district might be more profitable.

Finally, assess the competition. Are there any other convenience stores nearby? Can the market support another store? If the answer is no, you may want to look for a different spot.

Secure licenses and permits

Convenience stores require a variety of permits and licenses to operate legally. They vary by location and your proposed products but often include:

  • Business license
  • Retail food store license
  • Sales tax ID
  • Liquor license
  • Health permit
  • Occupancy permit
  • Employer identification number (EIN)

Keep in mind that you may need additional permits for lottery tickets, tobacco products, and other controlled convenience store products. If you plan to heat or prepare food, you might need a food service license. Want to make changes to your property? Look into the required construction permits.

Applying for licenses takes time, so it’s important to get started as soon as possible. The earlier you apply, the fewer delays you’ll experience down the line.

Market your business

Once your convenience store is up and running, you’ll need to find ways to get potential customers in the door. That’s where marketing and advertising come in — these activities build brand awareness and convince people to shop at your store.

Some ways to promote a convenience store include:

Your business plan should outline these strategies, but that doesn’t mean they’re set in stone. Don’t be afraid to conduct market research and experiment with different marketing tactics to find those that resonate with your convenience store customers. 

Offer grocery delivery through Grubhub

Grocery delivery is one way to attract new customers and bring in more revenue for your new convenience store. The key? Finding a trusted delivery service that offers quick checkout and fast, reliable service. Grubhub is the perfect partner — when you sign up, you’ll get access to our experienced drivers, marketing resources, and, most importantly, a preexisting customer base.

Want to learn how Grubhub’s delivery services can benefit your bodega or convenience store? Reach out to our team with questions, or get started with Grubhub today.