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13 min read

How to Open a Convenience Store: The Ultimate Guide

How to Open a Convenience Store: The Ultimate Guide

If you’re dreaming of opening a convenience store (c-store), it’s an opportune time to do so. Like any other business, opening a c-store requires significant preparation, business know-how, marketing savvy, and financial readiness to become successful. 

Given modern technology and automation tools, you can set your business up for success well ahead of your grand opening. Let's look closer at the foundational elements of a successful c-store launch.

Opening a Convenience Store 

The US convenience store market is expected to grow at a compound annual growth rate (CAGR) of 6.12% from 2024 through 2029, offering a great chance at recurring revenue in a stable and increasingly consumer-friendly market (Mordor Intelligence). While the need for accessing food, drinks, and lifestyle items in a convenient fashion won’t go away, thousands of other business owners think the same way. You need a strong operational, sales, and marketing plan to keep customers coming in the door and ordering online. 

Crafting a Business Plan: Key Components for Convenience Store Success  

Writing a business plan is one of the first things to do (perhaps even before choosing a name for your store or brand). A strong business plan includes everything from your target demographics, products to sell, and sales channels to your brand differentiation strategy, purchase incentives, and seasonal marketing campaigns, plus many other components. 

In the US, there are over 150,000 c-stores—most of which operate at around a 5% in-store item profit margin—so providing strong reasons for customers to choose your business over the thousands of others is critical. Sound business strategy and operational excellence are two driving characteristics that will attract new customers upon launch and retain them after your launch week. 

Ask yourself the following questions when drafting your business plan: 

  • What demographic(s) do I target and is this any different from the average c-store? 
  • What kinds of memorable and useful outside-of-store, in-store, and customer service experiences will my brand provide? 
  • Which offerings does my store have (e.g. convenient online ordering, enticing loyalty program, automated 24/7 customer service) that other stores don’t have, or don’t do as well? 
  • What products will I offer and at what price points? How will I ensure competitive pricing, unique products, or both? 
  • How will I provide a consistent, professional, and clean experience both in store and online such that customers return frequently? 

Determining your answers to these questions clarifies both the gap you’ll address in the market and how you’ll sustain sales volume. The nature of retail business is such that providing a rare, hospitable experience can be enough to spark word-of-mouth (WOM) referrals early on and encourage more people to check out your store.

Location Selection: 8 Factors to Consider for More Visibility and Traffic 

You may have heard the old saying: “Location, location, location!” This is an age-old phrase in the world of retail and hospitality about the crucial nature of choosing a location with lots of vehicle and foot traffic.  

This phrase is more than a trite observation, because you can grow your profit margin anywhere from 20 to 100% within just a few months’ time by opening your c-store in a high-traffic area. Here are eight questions to guide you towards choosing an effective c-store location:  

  1. Do the area’s zoning laws allow or prohibit c-stores? 
  2. How busy is the area on a normal Monday through Friday (no holidays, parades, events, etc.)?  
  3. How many competing c-stores are nearby (i.e. within a two- to five-mile radius)?  
  4. Is the area’s population increasing or decreasing year-over-year? 
  5. Is this building/commercial space large enough for my c-store and my goals? 
  6. Am I and my employees willing to drive to this location daily? 
  7. What is parking like and is it sufficient for my customers and goals? 
  8. Are there any other obvious or difficult challenges in operating a c-store here?

These are specific considerations that deserve your full attention, so don’t rush through them. Think wisely about the impact you want your c-store to be making three, five, 10, and 20 years from now—not just what business will look like a few weeks to months after opening.  

Financial Planning: Creating a Model and Conducting Research 

Planning your c-store's financial details from the beginning is a key part of getting it off the ground. It's even more important in a retail niche where the slightest adjustments can accelerate profits or deflate them.  

A c-store is much like any other retail business in that you stock inventory, sell products at competitive prices, offer periodic discounts, and incentivize customers to buy more frequently. C-stores are different in that people go to them for, well—convenience—picking up snacks, beverages, incidentals, and vehicle amenities. 

Building a useful financial model into your business plan is wise so you know what to expect before your opening day. Ask yourself the following questions when putting your financial details together: 

  • How much revenue do I need to make to break even by a certain date? 
  • How much revenue is necessary to pay all fixed expenses? What about variable expenses? 
  • How much can I afford to pay employees, and at which salary or hourly rates? 
  • What expenses can I reduce to keep costs as low as possible? 
  • What does my loyalty program consist of and how soon can we expect it to become profitable? 
  • What will my monthly or annual take-home pay be? 

Your financial model itself should be given thoughtful consideration, as well. Here are some important expenses and revenue channels to include: 

Expenses: 

  • Rent and utilities 
  • Staff and contractors 
  • Point-of-sale (POS) and financial operations expenses 
  • Computers, technology, and software costs 
  • Commercial insurance 
  • Worker's comp 
  • Payroll taxes 
  • Inventory and safety stock 
  • Security 

Revenue: 

  • Food and drink sales 
  • In-store product sales 
  • Gasoline sales (roughly four in five c-stores sell gas) 

Benchmark your financial model against other current c-store operations and review your revenue and expense categories thoroughly to ensure as much accuracy as possible. As an industry saying goes, “All models are wrong, but some are useful.” The idea is not to achieve perfection with your model but to work off realistic cost and sales inputs so you can achieve profit in as short a timeframe as possible.  

What Licenses Do I Need to Open a Convenience Store? 

It should come as no surprise there’s a lot of government paperwork and licensing required to open a convenience store. Most c-stores must complete and be able to reproduce, at a minimum:  

  • Articles of incorporation or company formation documents 
  • Employer identification number (EIN) 
  • Business license or business operation license 
  • Alcohol and tobacco license (if you’ll be selling these products—roughly 93% of US c-stores do) 
  • Doing business as (DBA) license (if you’re running your business under a different name) 

While an EIN is free, the fees associated with the above-listed documentation vary by state and county. Review your state’s required documentation to legally operate your business and start completing those documents as early as possible. Government paperwork often takes time to process and can delay your opening day goals if you don’t provide your team and operations sufficient lead time. 

Details can change when it comes to government business paperwork—and often do without notice. Always perform your own due diligence even during the consideration stages of starting a business and consult a lawyer or specialist based on your area(s) of need. 

Updates to the US 2021 Corporate Transparency Act also require business owners to file a Beneficial Ownership Information report with the Financial Crimes Enforcement Network (FinCEN) before January 1, 2025. Speak with your attorney or a relevant professional about legal matters to ensure you’re compliant. 

What Permits Do I Need to Open a Convenience Store? 

In many cases, US state governments require the following permits to lawfully operate a convenience store: 

  • Occupation permit 
  • Health permit 
  • Gas permit (if you’ll be selling gasoline) 
  • Lottery ticket permit (if you’ll be selling lottery tickets) 

Double-check all the requirements in your locale to ensure you’re completing the relevant paperwork and in the due timeframe. Review details with a lawyer or other licensed professional if you have questions. 

C-Store Design, Merchandising, and Layout 

Your store’s physical design elements—like front-of-store signage and lighting—as well as the floor plan, like how far apart shelves and promo bins are, directly impact your guests’ impressions of the store and their purchasing behavior. Providing enough space for guests to get around the store and find what they need is just as important as maximizing your space to maintain low costs. 

What’s more, you may notice that c-store floor plans are highly like those of grocery stores. There are multiple reasons for arranging shelves, freezers, and refrigeration walls in a way to facilitate the maximum likelihood of larger purchases from every buyer.  

Check out the following c-store layout and merchandising best practices to maximize revenue from day one: 

  • Place drink refrigerators and coolers far away from the entrance. Customers often drop into a c-store to grab a cool drink on a hot day or treat themselves to something nice. Putting these items in the back requires people to walk through most of your store and at least one to two aisles—thereby seeing more products—before they find what they need. 
  • Consider displaying high-traffic or high-value items to the right. People tend to turn to the right when walking into a building or location, so putting important items in that direction increases the odds they’ll pick one up.  
  • Customize your colors and material choices. Shelving, door, window frame, and lighting decisions may not seem like they have impact, but in a world where people can buy almost anything online, they’ll go to physical spaces for the experience it provides. Think about the visual experience you want your customers to have and how your physical store components facilitate that, and how you can bring this to life. 
  • Consider diagonally placed shelves. This may sound odd at first glance, but a diagonal shelving layout instead of a grid-based one is an effective theft deterrent. While the percentage of crime that occurs in convenience stores is low overall, shoplifters are only caught about 2% of the time (RecFaces). Being able to view guests’ movement patterns while they shop decreases the likelihood they’ll help themselves to the ol’ five-finger discount. 

Conversely, here are the outcomes your c-store should never create for customers: 

  • Leaving too much open space. Your floor plan should make reasonable use of the open spaces in your c-store, including between shelves and the checkout counter and aisles and the restroom. This is a suitable place to set up bins full of new or seasonal items, like sunglasses, mist fans, gloves, and children’s toys (purely as examples). Customers can easily spot your latest offerings and it’s low-hanging fruit for driving more revenue.  
  • Making aisles too cramped. On the flipside, not having enough space in your store is just as annoying and also dangerous. In the event of a fire or emergency, you don’t want anyone in the store to have difficulty getting out quickly and safely. Walk through your store on a regular basis and make sure there are no tight corners or precariously hung shelves. Make any adjustments needed right away so your guests feel at ease and welcome during every visit.  
  • Difficulty getting into or out of the bathroom. It’s no secret that millions of consumers stop at convenience stores every day to use the restroom. If your bathroom is out of soap or toilet paper, the lock doesn’t work, the mirror’s cracked, or a lightbulb needs to be replaced, do it right away. A comfortable, clean experience should be the bare minimum.  

Review your plans for the above with your strategic partners and senior staff if you’ve already brought them aboard. Commit deep thought to the experience you want your customers to have primarily, and secondly how you can combine that with profitable growth mechanisms for your business. 

8 Convenience Store Inventory Management Best Practices  

Efficient inventory management is a key driver of c-store success or failure. A well-structured system allows you to receive orders and generate sales almost on autopilot; a poorly maintained system or one with gaps holds your business back from its full potential.  

Thankfully, strong inventory management has never been easier. Here are eight principles upon which your c-store's inventory should be built: 

  1. Source in-demand products from reliable suppliers. One of the biggest aspects of successful inventory management is working with proven, quality suppliers. This supports clear inbound goods timelines and concise communications while minimizing risk of price fluctuations and operational delays. Research and vet suppliers thoroughly before signing contracts or committing to long-term engagements. 
  2. Categorize products with an ABC analysis. This is an inventory classification method used to determine which of your products sell best, sell moderately, and sell worst. Deploy this method as soon as possible so you can stock more products that drive revenue and profit for your store.  
  3. Optimize and automate your reorder points and PAR levels. Your reorder point is the date by which you must reorder specific product(s) in order to remain stocked, and your periodic automatic replenishment (PAR) levels are the maximum and minimum quantities you need of each item. Modern inventory management software simplifies this process so often, all you need to do is review your sales data, connect your ordering and inventory software, and set your levels.  
  4. Use handheld scanners. Using a handheld digital inventory scanner means you can get all of your inventory counted with just one or two people in a matter of hours, instead of requiring multiple staff to work on it for days. The average scanner only costs between $40-80, making it a no-brainer.  
  5. Maintain safety stock. Safety stock is the amount of inventory you keep to mitigate the impact of supply and demand fluctuations. Use the results from your ABC analysis to understand how much safety stock you need of each item, then order it as soon as you’re able to. 
  6. Know your metrics and review them periodically. C-store metrics include everything from your average number of customers per month and your store walk-in rate to your average order value (AOV) and inventory turnover ratio (ITR), and many others. Plot the metrics that are essential for your business’s success in a centralized document and review their performance often, so you know what to change. 
  7. Maintain a clean back office. Monitoring your metrics is closely aligned with a clean, efficient back office, which means you can access, review, and update sales, marketing, inventory, loyalty, online ordering, and employee information at a moment’s notice. Keep all your subscriptions, bills, and tools up to date so you never have to worry about technical or financial neglect preventing sales. 
  8. Conduct an annual inventory hand count. Even in the age of handheld scanners and automated reordering, it never hurts to conduct a manual inventory count at least once every 12 months. You never know when you’ll come across a product or promotion you forgot about, equipment that needs fixing, or spoiled inventory that needs to be thrown out.  

The above principles lay the foundation of inventory management so you can simplify and speed up your process even more as your business grows. Continue researching cost-effective inventory practices and technology so you can make investments where it counts. 

Technology and POS Systems: Streamlining Operations  

Successful c-stores rely on as much computer hardware and software as possible to provide best-in-class guest experiences, maintain smooth and secure operations, and prevent the likelihood of financial or reputational loss. Here's a list of initial hardware and software you’ll need to open and operate your c-store: 

  • Register 
  • Point-of-sale (POS) software 
  • Inventory software 
  • Supplier software 
  • Fuel management software (if you’ll be selling gas) 
  • Labels and label printer 
  • Project or task management software 
  • HR and payroll software 
  • Cybersecurity solutions software 
  • Security cameras, automated backups, and cloud-based storage systems 
  • RFID employee badges and access control solutions 

Research your options for each of these tools to make sure you’re getting the right solutions within the budget you have available. Remember that technology—both hardware and software—is always advancing, so invest in the solutions you need to launch your c-store while keeping an eye on the future. 

Grand Opening: Launch with a Bang 

You've obtained commercial property, acquired opening inventory, prepared all your tech solutions, and hired staff—it's time for your c-store grand opening! Here's what we recommend keeping in mind as you put the finishing touches on everything: 

  • Choose a date. If you’ve prepared well, locals will have already taken notice that a new store is opening and will be (hopefully) as excited as you are. Set a firm date on your calendar and work backward from there, depending on how much time is left.  
  • Finish your website. If you haven’t started (or finished) your convenience store’s website, set aside time to ensure it has all the info it needs for initial customers. You don’t want people checking out your website only to discover bugs or missing info when people need it most. 
  • Prepare digital marketing materials. This should include everything from social media posts (don’t forget Google My Business, Yelp, and Foursquare) and email campaigns to blog articles and videos. 
  • Obtain physical marketing materials. This refers to opening day signs, banners, and other eye-catching arrangements that will encourage day-of passerby to drop in. Think about what you can afford and don’t go too heavy on this front; digital marketing and convenient checkout experiences are where you should place most of your efforts. 
  • Align your online ordering and loyalty program. Opening a new business is one of the easier times to funnel people toward your online ordering system and loyalty program. Give people a great incentive to sign up online, like buy-one-get-two free, or a 20% discount on all items ordered in the first week. 
  • Double check everything the week before. Large events like business launches have a way of overwhelming the mind and diluting focus. Review important details like POS software, security protocols, and marketing campaigns with your staff so everything goes off without a hitch.  

How Much Does It Cost to Open a Convenience Store? 

Opening a new convenience store can cost anywhere from $50,000 to $100,000, though this range may vary greatly depending on the size of the commercial space, inventory costs, and other expenses associated with opening. It's wise to develop a business launch budget and financial model to have a realistic perspective on how much money you’ll need to open and what your revenue must consist of to be profitable. 

It also helps to save or raise more money than you’ll need in the event of unprecedented economic changes. Supply chains and costs often fluctuate with little to no notice for end users, so there’s really no such thing as being too prepared. 

How to Make Your Convenience Store More Profitable 

When your store’s been open for a few days, chances are you’ll already be thinking about how to take revenue even higher. The following approaches can net you some significant revenue and profit increases with diligent application: 

  • Build and maintain clear operational systems. C-stores are much like restaurants and grocery stores in that profit comes from revenue generated via sales volume, rather than profit purely from margin. Remaining profitable as a retail business isn’t normally contingent on what you add operationally; it’s what you keep the same or remove. Review all of your current processes—everything from sales and discounting to closing and opening—to see which operations you can trim down. 
  • Hire great employees. One of the oldest and truest elements in business is that hiring the right people makes a night-and-day difference. Hiring individuals who catch important details and are pleasant to work with make a difference for your customers, too—leading to more sales overall.  
  • Offer a wider range of food. It may sound unbelievable, but from 2019 through 2023, the number of US consumers who visited c-stores above other dining categories like quick-serve restaurants (QSRs), coffee shops, and full-service restaurants grew by 11.98% (Convenience). The broader range of items you offer, the more likely you are to convert new and existing guests alike.  
  • Increase your in-store prices. Remember, c-stores are all about convenience—not merely about great deals or the products themselves. It's the same reason people buy food and drink at sports events; they’re purchasing for the convenient availability of the items, not merely the fact they exist. Test pricing on a few A-level inventory items and take notes on what works vs. what flops.

Continuous Improvement and Expansion Strategies 

When the initial sales have slowed down and the opening day excitement has worn off, you’ll be looking to reach new customers and build more partnerships. Tapping into the right strategies will keep your business moving even during slow seasons and economic uncertainty. Check out the following four c-store expansion ideas: 

  • Offer online ordering and delivery as soon as possible. If you weren’t able to offer delivery and online ordering during your launch, prioritize this as soon as your profit allows. Since 2020, less than seven percent of c-stores have offered first-party delivery (Statista)—with DoorDash winning a whopping 60% as of 2021 (Edison Trends). Grow your revenue and your profits by bringing both your online ordering and delivery to first party. 
  • Source more hard-to-find items. C-store customers are more likely to browse your products, purchase them, and return if you have a wider, higher quality selection. Review your existing supplier relationships and explore new ones to find more relevant or higher quality products. 
  • Run more loyalty program promotions and incentives. The data is clear: three in four loyalty program consumers will buy more products from companies they participate with (PYMNTS) and retail loyalty program members generate 12 to 18% more (Accenture). 
  • Open more locations. This is perhaps the most complicated, expensive, and time-consuming aspect of growing a c-store business, but also one of the most effective. Having more locations almost invariably means more customers and profit—without changing your operations, tech stack, or marketing campaigns. Use a process similar to your first location when considering your second or third, and get ready to see your revenue grow even faster. 

Bringing It to Fruition 

There’s no doubt about it: opening a new c-store takes serious time, financial investment, focus, and persistence. Even with the opportunity to capture a percentage of US consumers’ growing c-store spending, the same retail challenges remain: persuading people to visit and buy from your store instead of others’.  

If you want to ensure the odds are increasingly in your favor, installing an online ordering and loyalty system for your c-store site is essential. Paytronix provides a full suite of loyalty and online ordering customer engagement and marketing automation solutions that can drive double-digit gains for your business. Book a demo now to learn more. 

paytronix online ordering demo cta

Note: This blog article is written for informational and educational purposes only. Nothing in this article is designed, intended, or provided to act as legal or financial advice. You're encouraged to consult relevant, licensed professionals when making decisions that may affect your personal financial, economic, or legal circumstances. Paytronix makes no offers or claims of how to start or open a convenience store nor the financial, technical, legal, or professional requirements to do so. 

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