What Is The Average Convenience Store Franchise Profit?
By Space Coast Daily // May 29, 2019
Convenience stores are now on the rise. You can find them anywhere in large cities around the world. But why are there so many convenience stores these days?
There are three primary reasons why convenience stores are popular:
- Easily attracts customers due to the variety of products available
- Low start-up costs for franchisers
With their ease of access and heavy customer traffic, convenience stores can easily command high product prices. This translates to healthy profit for a small business.
Because of that, a lot of people are enticed to buy a convenience store franchise to get their own small business started. But before you do that, you need to know the average convenience store franchise profit.
Determining the Profit of An Average Convenience Store Franchise
In 2018, 153,237 convenience stores reported to be operating in the US. These stores have generated $616.3 billion in total, which translates to $4 million per store annually.
But that is really not the actual profit that an average convenience store makes. To determine the actual profit of your convenience store, you must first calculate your gross sales and costs that your business incurs within a specific time period.
Here is how you can determine the actual profit of a convenience store:
Gross Sales – Expenses = Net Income
Figuring out the average revenue of a convenience store can help you when it comes to picking top franchise cost & profit. There are a lot of convenience store franchises out there. Each with their own start-up costs and potential profit.
Factors That May Affect The Profit of a Convenience Store
There are several factors that can have a significant effect on the profitability of a convenience store.
- Location or ease of access – The key selling point of convenience stores is, as the name suggests, convenience. People flock into convenience stores because of their ease of access. Everyday needs are also provided by the store.
Convenience stores sell products that are well-recognized and use a pick-and-pay system for customers. Customers just pick any readily-sold products inside the store and pay them at the counter.
- Competition – Since they are selling readily-sold goods that are in the form of branded pre-packaged products, they may face stiffer competition. As mentioned earlier, there are already a lot of convenience stores. Thus, it’s no surprise that other convenience stores may sell identical products.
Aside from that, these goods provide small profit cost margins since convenience stores can’t increase their price that easily. Customers are likely to go to other retailers that sell the same products but on a much lower price.
- Pricing – Now that consumers are savvier when it comes to prices, convenience stores must be able to control the prices of their products. They’ll compare your price to other retailers, and it’s up to you if you can match them.
Owning A Convenience Store
Convenience stores, as its name suggests, must be very convenient for the customers. It must sell convenience for it to survive the very competitive retail industry. When you want to start your own “mini convenience store” make sure that it’s easily accessible, has a good location, and is full of popular convenience products.
It’s also important to consider the shopping experience of customers in a convenience store. If the store is not convenient, customers will probably won’t go back. Hence, losing a potential loyal customer.
Aside from stocking the store with the most common convenience products such as eggs, bread, milk, soda pop, and snack items, you can mix it up by serving additional products and services. Other products and services may include tobacco, newspapers, magazines, photocopying, payment and loading center, fax service, lottery tickets, etc.
But all of these won’t matter if the location of the convenience store is terrible. Location plays a huge role in the success of a convenience store. It must be located at a convenient location where there’s heavy foot traffic like in shopping districts, office districts, or transportation terminals.
Starting and operating your own convenience store is still a good business today even though this is already a very mature market. While most people are now into online shopping, there are still a lot of people who like shopping for their basic needs at a nearby convenience store.
The profit of an average convenience store franchise depends on several factors. It can also change every year. Provided that your convenience store will continue providing the needs of your customers, you price your goods appropriately, and you control the costs of your small business, you’ll definitely earn healthy profits from your convenience store franchise in the long run.
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