How Much Does It Cost To Build A Grocery Store 2024?

Someone interested in the grocery business may want to find out how much does it cost to build a grocery store.

While we will get to that question in a while, first, it is essential to understand and consider all the necessary costs associated with this business.

There is so much to consider, from the most minute thing, such as aisle signage, to more important costs, such as that of the building.

So keep on reading as we help you identify these costs and give you a final estimation of how much it will cost for you to start a grocery store in the U.S. in 2024.

How Much Does It Costs To Build A Grocery Store

Costs to Consider When Building a Grocery Store

There are so many factors and things that affect the cost of building a grocery store. Right from the location to the size of your store, etc.

Here are some costs to consider when building a grocery store:

1. Location

Location of grocery store

When looking for a location for starting a grocery store, you will have three options:

  • Renting an existing store
  • Buying an existing store
  • Building a new store

The ideal size of the store that you rent for your grocery store should be around 12,000 sq. ft. based on the size of the top-rated grocery chains such as Trader Joe’s, Aldi, etc.

Now, the rental cost that you’d have to bear would totally depend on your location, not to mention real estate rentals constantly keep changing. But to give a rough idea, for a rental store that is 12,000 sq. ft. and with an annual rate of $15 per square foot, it would cost you $15,000 a month to rent.

Now, just like rentals, the buying price of real estate properties also varies and keeps changing depending on the changing market trends. Additionally, buying a store could cost you millions in big cities like New York as compared to buying it in a small city like Idaho, where similar properties cost $500,000.

Lastly, building a new store costs a lot more than both renting and buying an existing store. This is because, in this, you not only have to bear the cost of land but also put money into building the exterior and interior of the store.

According to Home Guide, constructing a commercial space can cost you anywhere between $240 to $870 per square foot. And the construction cost in the South and Midwest is less compared to the East or West Coast.

So if we take the average per square foot cost of $555 and multiply it by 12,000 sq. ft., then we can see that the average cost of just constructing a grocery store comes to about. $6,660,000

2. Tools & Equipment

Tools & Equipment for grocery store

The tools and equipment that you will buy for your grocery store are going to be a big upfront expense. So consider investing in high-quality tools and equipment so that you do not have to worry about them breaking down in the long run.

Here are some important items that you will need to purchase & their cost:

1. Storage Coolers: $300 to $10,000 each

Storage coolers come in many shapes and sizes, and these are going to help you keep the items at the right temperature before you put them out for display.

2. Refrigerators & Freezers: $1,800 to $10,000 each

Equipment like refrigerators and freezers are a must in a grocery store. And just like a storage cooler, the price of refrigerators & freezers would depend on their size. The bigger the size, the bigger would be the price tag.

3. Shelves: $200 to $1,300 each

The more aisles you have, the more number of shelves you will need. The cost of shelves ideally ranges from $200 – $1,300 each, depending on the size, quality, etc. Most retail shelving companies will give you a custom price quote for this.

4. Carts & Shopping Baskets: $6 to $90 each 

You can find around 600 shopping cars in a typical grocery store like Walmart, but chances are you will need only around 150 of them for a smaller grocery store. Depending on how much space you have, you can opt for smaller or standard sizes of shopping carts & baskets.

5. Aisle Signage: $100 to $500 each

Aisle Signage is important as it allows both customers and employees to navigate the store easily. You can find simple designs for less and more elaborate designs for a higher price. Invest in aisle signage that reflects your brand image.

6. POS System: $49 to $179 per month

A POS system is essential to easily manage and keep track of your business’s daily operations and payments.

The price of the POS system will depend on the features you want; for advanced features such as employee management tools, inventory management tools, etc., expect to spend on the higher side of the price range.

3. Inventory

grocery store Inventory

The cost of inventory will largely depend on two things:

  • The number of products you sell
  • The type of products you sell

For example, a small grocery store may have as many as 500 items, while a mid-sized grocery store might have up to 1500 items. On average, you can expect to spend upto $20,000 on procuring the inventory.

Here’s a list of some essential grocery items that you’d have to stock up on:

  • Food items such as snacks & beverages, dairy products, canned items, etc.
  • Frozen food such as meat, vegetables, ice creams, etc.
  • Cleaning products such as detergents, mops, garbage bags, etc.
  • Personal hygiene items such as toiletries, soaps, shampoos, tampons, etc.
  • Stationery such as pens, notebooks, colors, etc.
  • Other items such as health & beauty products, pet supplies, etc.

4. Insurance, Permits & License

Insurance, Permits & License

Before opening a grocery store, you must obtain various licenses, insurances, and permits, depending on the state you live in.

This may include obtaining a business license, food license, local business license, and even liquor license if you wish to sell liquor as well.

Ideally, you would need to register with the secretary of state within the jurisdiction of your state. Post this, you can obtain a basic business license, apply for zoning and health permits, sales tax permits, etc. The cost to procure these could lie between $1,000 – $2,000.

Some other licenses and permits that you might need to obtain include:

  • Filing fee for registering your business: $50 – $100
  • Food stamp imprest permit: $50 – $75
  • Federal employer identification number: $50
  • Zoning permit: $50 – 50,000
  • Health permit: $25 – $500
  • Wastewater permit: $500 – $1,500
  • Fire safety permit: $100 – $200
  • Retail food establishment permit: $25 – $500

5. Hiring & Managing Staff

You cannot run a grocery store all by yourself. You must hire staff members like cashiers, store managers, cleaners, etc. Here are some positions that you may need to hire for & their average pay:

Hiring & Managing Staff
  • Bagger: $7.25-$9.00 per hour
  • Custodial Staff: $8.00-$10.00 per hour
  • Cashier: $7.25-$9.00 per hour
  • Department Manager: $14.00-$16.00 per hour
  • Store Manager: $20.00 per hour
  • Assistant Store Manager: $16.00-$18.00 per hour

Don’t just hire anyone; be very careful when hiring. Identify which section needs the most help. Do you need more custodial Staff, more cashiers, or both? Fill the positions accordingly, then.

Also, to post a job ad for this, you can expect to spend $0.10 per click to $249 per month.

6. Security Items

Security Items

An essential cost to consider when starting a grocery store is to think about the security of your store and that of your customers. For this, you may have to spend on the following:

CCTV Cameras

The cost of a CCTV camera could vary depending on the level of security required and the number of cameras. On average, you can expect to spend $400-$4000 on installation and $20-$100 a month on maintenance of CCTV cameras.

Security Staff

Be ready to spend $8.20 – $17.00 an hour on hiring security staff. Furthermore, you will also have to spend on uniforms, equipment, etc.

Intruder Alarms

Intruder Alarms are quite important in protecting staff and customers and also to avoid theft. Buying an intruder alarm could cost up to $400 and will require $45-$50 monthly fees.

7. Accounting/Legal Services

Accounting/Legal Services

In order to run your grocery store, you will need to obtain a business license, for which you might have to hire an attorney. An Attorney’s fees typically range between $172 to $357 an hour. The attorney will also be able to help you in obtaining a trademark for your brand and more.

If you opt to hire an experienced accountant to keep your business expenses in check, then you can expect to spend between $260 and $375 a month.


How Much Does It Cost To Build A Grocery Store?

Opening a grocery store requires planning and careful consideration.

As we saw in the above section, the cost of building a grocery store can vary greatly depending on plenty of factors, but you can expect to spend between $55,000 and $250,000, that is, if you rent or buy an existing grocery store. This could touch millions if you build a grocery store from scratch.

Remember, the success of your grocery store depends on careful planning and expenditure. And while it may seem tempting to cut costs by buying low-quality shelves and other items. But we suggest you don’t do that if you want to save money in the long run.


What is the Profit Margin of Grocery Stores?

Profit Margin of Grocery Stores

Grocery stores typically have slim profit margins of 1% – 3%. And because of this low-profit margin, it is essential to keep your sales consistently high.

While just getting started, you can attract customers and keep your sales numbers healthy by giving certain offers or by pricing your items at a competitive price.

The profit earnings potential in the grocery business directly depends on the sales volume, and so does the success of your business.


Factors That Affect the Profitability of Grocery Stores

Owning a grocery store is profitable; however, the money you make from this business depends on the careful management of the following things:

  • Location: The location of any business plays a very important role as it impacts the customer’s footfall directly. So consider opening your grocery store in a densely populated area for more customers.
  • Target Market: Understanding your target market and then offering products and services accordingly can help you increase your profits.
  • Operating expenses: Your operating expenses will slim your profit margins. So, make sure you work on minimizing your operating expenses. This includes managing rent, labor costs, utility costs, etc.
  • Competition: Opening a grocery store in a competitive area might not be very good for your business. There are already so many big grocery chains such as Walmart, Aldi, etc. Opening a grocery very close to them can harm your business unless you have an attractive USP or prices.

Wrap Up

As you saw in this guide, opening a grocery store is not easy. It not only requires a hefty investment but also careful research, planning, and execution.

And even after that, the profit margin in this business is very slim, and your business’s success is highly dependent on the number of sales.

So we don’t mean to discourage you, but since this is a high-cost investment business, make sure you do your research carefully and only then invest in this business.

We hope you found this guide on: “How much does it cost to build a grocery store” useful.


FAQ’s

Is it better to build a grocery store or buy a grocery franchise?

Since the success of a grocery store largely depends on the volume of sales, we recommend you buy one of the best grocery franchises instead. Since franchises already have an existing brand name anda huge customer base, attracting them and having a consistent sales volume might not be a problem.

How do grocery stores get products?

Grocery store owners procure products from warehouses or third-party distributors to benefit from a low purchase price.

Which is the number 1 grocery chain in the U.S.

Walmart is the number 1 grocery chain in the U.S., with annual sales of $420 billion.

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