Convenience stores are one of the most frequent shops that we see in almost every state, neighborhood, and block.
Since they are such a frequent business with products that attract literally everyone, it has a massive market size and potential.
Additionally, because of these advantages, it is easier to succeed and make good profit from them.
If you are thinking of opening your own convenience store, you might wonder how much you can expect to make.
There are many variables, and knowing these variables is important to prepare yourself and increase your income.
This article will take a look at the average income of a convenience store, how much it costs to open one, and every detail about its income.
Average Income of a Convenience Store
The United States has over 150,000 convenience stores in total, and these stores generate about $616 billion annually altogether.
This equals about $4 million in annual total sales per store. Of these $4 million in sales per store, $1.7 million were in-store sales, meaning the sales that do not include things such as gas sales. This means that a convenience store has an average annual revenue of $1.7 million.
However, these numbers are only revenues and not net profits. The average net profit, the money that the store manager takes home, is about $60,000 to $100,000 annually. But it’s important to remember that many factors affect this net profit.
Average Profit Margin of a Convenience Store
Convenience stores have a very wide product offering, and each of these products has different profit margins.
On top of it, there are other factors, such as location, size, and quality, that effects the profit margins. That’s why it is not easy to give an exact number.
However, the average markup on products at a convenience store is about 25%-30%.
There are products with the highest and the lowest product margin, as well. Here is a breakdown of the profit margins:
| Tobacco Products | 15% |
| Average Profit Margin | 25%-30% |
| Health and Beauty Products | 50% |
Average Monthly Income of a Convenience Store
According to the latest reports, the average annual revenue of a convenience store, only counting in-store sales, is $1.7 million.
By counting other sales as well, this number goes up to $4 million annually. The profit that is left from these numbers is generally between $60,000 to $100,000.
From these numbers, we can see that generally, the average monthly income could be anywhere between $5,000 to $8,333.
Note that these numbers are average, and if your store makes more sales than the average, you could make well above $10,000 a month.
Average Convenience Store Employee Income
The average salary for a convenience store employee ranges from $8.75 per hour for Manager to $14.74 per hour for an associate.
Some factors, such as the location and the experience of the person, could affect these numbers and could be higher.
The annual salaries range from $42,000 to $75,000, depending on the roles and the experience.
Factors Affecting Convenience Store Income
The income of any convenience store is mostly determined by many different factors.
These factors are generally the driving force of the overall income of the store. By being aware of them and utilizing them for better, you could manage your income.
Location
Generally, the biggest cost driver of any business is either the rent or the mortgage payments of the building.
It’s the same for convenience stores; if you pick a location that is expensive, it will drive your costs upwards.
In addition, the neighborhood is also important, the people living there, safety, and so on.
If the area is safe, people are in a good situation financially; you will have a more stable business and more customers.
Size
The bigger your store is, the more expenses you will have with more employees, products, and inventory stocking.
Your bills and rent will also go up, which will increase your expenses and lower your profit margin.
Overall, the size of the store will either increase or decrease your overall costs, which will have an effect on your profit margins.
Equipment
Equipment comes in various shapes and forms. The higher-end equipment will be expensive to buy and run with higher maintenance costs but with less frequent maintenance needs.
The low-end equipment or old equipment will have more frequent maintenance needs with potentially also high maintenance costs. All these will increase your expenses, leading you to spend from your income.
Overhead Costs
Recurring costs such as bills, rent, insurance, and other similar costs are the line between higher or lower profit margins.
That’s why it’s important to choose the best cost-friendly option to control your recurring costs so that your profit margin can be higher.
Product Selection
Convenience stores have the option to sell many different items from different industries. Each of these products comes with different profit margins and number of sales.
So it’s important to do market research and know which product is the most income-friendly one with a good profit margin and high sales numbers.
How Much Does a Convenience Store Cost to Open?
Overall, it costs between $50,000 to $500,000 to open a convenience store.
Depending on factors such as location, size, number of employees, permits, and others, this could also be well over $1 million.
The biggest cost drivers are generally the building costs and the equipment. Here is a small breakdown:
| Type | Costs |
| Building | $0-$350,000 |
| Permits & Licenses | $1,984-$2,100 |
| Equipment | $27,750-$141,800 |
| Insurance | $100-$150 |
| Inventory | $15,000-$20,000 |
These numbers are quite average numbers, and depending on your individual choices, you have the option to increase or decrease them.
Most of the decisions you make here will also affect your recurring costs later on, such as the building, which will be your monthly rent, and the equipment will have maintenance costs.
Tips to Maximize Convenience Store Income
Even though there are factors that determine your costs, you could still do some other stuff to maximize your income to the fullest.
These include strategically changing or adding things to your store.
- Increase the product selection: The more diversity you have in your products, the more different customers you will attract, opening doors to more sales.
- Play around with prices of the popular items: There are certain periods when certain items go up in popularity, or some items always sell more than others. You could increase the prices of these items strategically from time to time.
- Utilize product placement perfectly: You might have realized that there are certain placements of certain products in stores. Some items are generally put at the checkout for people to buy at the checkout when they see them. This is called product placement, and good use of it could increase your overall sales.
- Make sure to make qualified hires: A bad hire will cost you over $5,000 in total with their training, insurance, and other costs. Always make sure to hire people who have experience in the industry.
- Loyalty programs: By giving rewards to your recurring customers, you ensure that you create a loyal customer base. Create loyalty programs where your recurring customers can get discounts from time to time.
Also Check Out Sheetz Franchise
Conclusion
Convenience stores are everywhere in our daily life. Because they are so frequent, they make a great business with lucrative opportunities.
The average net profit of a convenience store is between $60,000 to $100,000 annually.
The profit margins are lower per item than other types of businesses most of the time, but the amount of products you sell is way higher.
That’s why they have the opportunity to provide quite the income for the owner. If you can utilize the factors that affect your income, such as the size, number of employees, equipment, and so on, you could even increase it more than the average number. Overall, a convenience store is a great choice if you are looking to own one.
FAQ
Do all convenience stores make a profit?
No, there could be convenience stores that lose money. It depends on the management of the store and other factors we listed above.
How much can I expect to earn annually as a convenience store owner?
Generally, convenience store owners take home about $60,000 to $100,000 annually after you remove costs from the income. If you can reduce your costs, you can take home more.
Do startup costs affect a convenience store's income?
Generally, startup costs are one-time fees that do not recur. That’s why they mostly don’t affect your annual income since they are not repetitive.
However, the equipment you buy, the insurance you choose, and the building you rent will all have recurring costs.
Even though they are not directly recurring costs, they will have an effect indirectly.
Sources
https://sprockets.ai/how-to-make-a-convenience-store-profitable/
https://www.indeed.com/cmp/Convenience-Stores/salaries
Amit Gupta is the founder of DrFranchises – a digital marketing agency that helps brands rank better on Google Maps through local SEO strategies. Amit has over 11 years of experience in digital marketing, SEO, email marketing, and social media marketing. He’s also the owner of multiple franchises and has helped countless brands achieve success online. When he’s not working, Amit can be found playing with his dog.