earnings of a shop owner

curious18

Hi,
I am just wondering what would be the annual earning of a small grocery shop - one that isn't franchised. I always wanted to run my own business and am just wondering if anyone has any ideas on what one would earn. I know it would differ but just an average income.

Also what would be the costs of setting it up?

Thanks.

delllat

how long is a piece of string ??
far too many variables to give even a ballpark fiqure

area /location
footfall
accessability
rival stores close by
nearest supermarket
opening hours
and thats jst off the top of my hread

curious18

Hi there,

well just say all the variables were in the favour of the shopowner as in supermarket far away, busy location etc. I just want to see what they could get - would you eark 60K?

MrMatisse

You could earn 60k, but its tough to do in a city, there are so many spars etc.

DubTony

I know a fellah who earned nothing from his business for 2 years before closing it. I know another guy who has 2 shops and takes out 120k a year. Take your pick.

Bandara

How much you earn is depending on how talented you are in retail. You can get the best site in Dublin and if your clueless you'll bleed huge amounts of money on a daily basis.

And if you have no experience at c-store retail then your going to lose everything you have regardless of any other variable.

2nd Row Donkey

the answer is - not as much as you think.

Most small convience stores need to make a turnover of 40-50k a week minimum with a 25% margin to cover their overheads and still make it worth their while.

PM for more advice if your serious and I can point you in the right direction .

mrDerek

2nd Row Donkey wrote: »

the answer is - not as much as you think.

Most small convience stores need to make a turnover of 40-50k a week minimum with a 25% margin to cover their overheads and still make it worth their while.

PM for more advice if your serious and I can point you in the right direction .

40-50k a week? surely that cant be right

MrMatisse

I reckon that relates to a Dublin city centre store.

Bandara

mrDerek wrote: »

40-50k a week? surely that cant be right

its not right, its so far off the mark its untrue.

If your not paying a franchise fee you can run quite comfortably at about 18%-19% for all costs, thats leaving you with a retention of close to 6 or 7 percent, (even if you've a big mortgage on the store your still retaining about 4%)

Which in turn means your easily clearing 100k a year, EASILY.

If you have a regular store doing 45k a week you are going to be doing EXTREMELY well for yourself. Even making 125K+ is feasible if you've a strong food participation.

DubTony

2nd Row Donkey wrote: »

the answer is - not as much as you think.

Most small convience stores need to make a turnover of 40-50k a week minimum with a 25% margin to cover their overheads and still make it worth their while.

PM for more advice if your serious and I can point you in the right direction .

WTF? 50k a week is rare in the business. Especially in a "small" store. It's all down to costs, and turnover per square foot. One store I ran did about €30 per sq. ft. (€60k a week / 2000 sq.ft) Another did just under €10 (€32k a week / 3400 sq. ft.). Franchised stores benefit from the known name over the door, but cost more to run (in general). Independents, while cheaper to run rarely perform as well.

Lots to consider. To the OP, Hammertime's advice is good. If you've never done it before, you'll have a steep learning curve so be prepared to lose some body parts. :eek:

PhatPiggins

curious18 wrote: »

Hi,
I am just wondering what would be the annual earning of a small grocery shop - one that isn't franchised. I always wanted to run my own business and am just wondering if anyone has any ideas on what one would earn. I know it would differ but just an average income.

Also what would be the costs of setting it up?

Thanks.

Call into a few similar unfranchised stores and offer to work for free for a month. It'll give you a good feel for the business and the experience could save you X amount of money.

I'm not suggesting you'll learn everything in a month but at least it will be a starting point.

scull2009

always kinda wanted to know this aswell.
I was wondering what the markup is on products.

Say I am selling a bottle of coke , i think they are £1.20 nowadays.
How much is the shop paying for this bottle?

TheInquisitor

scull2009 wrote: »

always kinda wanted to know this aswell.
I was wondering what the markup is on products.

Say I am selling a bottle of coke , i think they are £1.20 nowadays.
How much is the shop paying for this bottle?

If its direct from coke their getting it for £12.67 per case of 24 so 53p each + VAT. 1.20 less vat is 99p so their margin on the coke is 46.46%. However if their getting it through a middle man such as P&H or bookers their margin will be closer to 30-35%.

FYI our shop charges £1.10 for all coke products like that and has them on a continuous offer of 2 for 1.70. It really builds up customer loyalty seeing a regular product they buy on a good offer.(id say 70% of people use the offer). WH Smyths over here charges like £1.50 for coke. Bloody crazy prices!

DubTony

scull2009 wrote: »

always kinda wanted to know this aswell.
I was wondering what the markup is on products.

Say I am selling a bottle of coke , i think they are £1.20 nowadays.
How much is the shop paying for this bottle?

ah now, come on. You're looking for trade secrets here.

TheInquisitor wrote:

If its direct from coke their getting it for £12.67 per case of 24 so 53p each + VAT. 1.20 less vat is 99p so their margin on the coke is 46.46%. However if their getting it through a middle man such as P&H or bookers their margin will be closer to 30-35%.

FYI our shop charges £1.10 for all coke products like that and has them on a continuous offer of 2 for 1.70. It really builds up customer loyalty seeing a regular product they buy on a good offer.(id say 70% of people use the offer). WH Smyths over here charges like £1.50 for coke. Bloody crazy prices!

Please stop revealing trade secrets

Seriously though. The margins on goods in a c-store vary drastically. (I'm going to talk about return on selling price as opposed to mark-up from here on). Services offer the lowest return. Phone credit is down to about 4% these days, unless it's gone lower in the last year. Cigarettes in general give back a little less than 10%. Confectionery is anyone guess. Prices vary wildly. The norm about 15 years ago was about 28%. But I've seen 35 to 40% back on Cadbury, Nestle and Mars products.

News and magazines are generally fixed at 25%. Goods like the aforementioned Coca-Cola also vary wildly. Buying direct from the manufacturer definitely does not guarantee the best price. I used to buy from a guy in a van who was 20% - or more - cheaper than the Coca-Cola direct. Many cash and Carries will offer a "Buy 5 - get something free" deal on a wide variety of products, so there's massive scope for increasing margins.

In general, it's the mix of the business that gives the bottom line margin. Cigarettes will massively outsell rolls of sellotape or sewing kits and the margin on both is reflected in this. The basis for this (and any business) is that the products that sit longest on the shelf, or require the most manpower to sell, are the ones that should have the highest profit margin on them.

/secrets of the C-Store Retailer

DoMyBooks

Theres some great advice above. The one big thing I've personally noticed is that C-Stores can get complex quickly. You have 1000's of lines the vast proportion of which are dated and have to be rotated and managed.Then little things like selling M50 tolls and Luas tickets which can be an administrative nightmare unless you get on top of them immediately.


HACCP if your selling food, underage laws if your selling cigarettes, shrinkage from staff and customers its really not for the faint hearted.

DubTony

DoMyBooks wrote: »

Theres some great advice above. The one big thing I've personally noticed is that C-Stores can get complex quickly. You have 1000's of lines the vast proportion of which are dated and have to be rotated and managed.Then little things like selling M50 tolls and Luas tickets which can be an administrative nightmare unless you get on top of them immediately.


HACCP if your selling food, underage laws if your selling cigarettes, shrinkage from staff and customers its really not for the faint hearted.

Jesus. DoMyBooks, you make it seem like it's a 24/7 grind, with lots of worries and hassles.

Oh wait. IT IS.

Descav

Hi, i'm also looking into this area.

Does anybody know Where do you go to get a license to sell alcohol as part of your convenience store. Is it the same license as a normal off license and how much does it cost?

Also any ideas on the below?
1/ average margins on beer/wine/spirits
2/ Do you need a license to sell cigarettes in a newsagents?
3/ Top 10 selling products in convenience stores(generally)
4/ Are all cold food items 0% VAT and heated 13.5%

Any help is much appreciated.

phantom_lord

DubTony wrote: »

WTF? 50k a week is rare in the business. Especially in a "small" store. It's all down to costs, and turnover per square foot. One store I ran did about €30 per sq. ft. (€60k a week / 2000 sq.ft) Another did just under €10 (€32k a week / 3400 sq. ft.). Franchised stores benefit from the known name over the door, but cost more to run (in general). Independents, while cheaper to run rarely perform as well.

Lots to consider. To the OP, Hammertime's advice is good. If you've never done it before, you'll have a steep learning curve so be prepared to lose some body parts. :eek:

Why is that? Does being franchised really add that much? Is there many benefits when it comes to purchasing costs?

DubTony

phantom_lord wrote: »

Why is that? Does being franchised really add that much? Is there many benefits when it comes to purchasing costs?

My experience has been that it's not a massive amount in franchise fees, but extra payments can add quite a bit. Now, while these are usually well covered by rebates, they can have an affect on cash flow.

Franchise fees for a 2000 to 3000 sq. ft store can run from around 5,000 to 7,000 a year. There'll be advertising charges on top of that, and if the group wants to run a local campaign, there'll be an expectation that each store in an area will contribute.

Central billing can have it's own cost. (That's where a retailer buys from company A, who bills the franchisor, who in turn bills the retailer). The cost of goods from most of the central billing suppliers is rarely different than an independent will pay. One franchise I was with charged one percent for most central billing invoice they received.

A percentage warehouse charge can be thrown on top for everything that comes from the franchisors warehouse. A good independent can avoid all of these charges by doing his own negotiations with suppliers and getting a better deal. Franchisors also expect retailers to shop almost exclusively within their system.

There are advantages as well. The known name over the door is the obvious one. Advertising on a national basis ensures the brand stays fresh in people's minds. Most new retailers find it extremely difficult to open accounts with cigarette companies for example, whereas a central billing arrangement generally means that every company will supply without hassle. The annual rebates are also attractive, but a shop needs to be profitable on it's day to day business. I've seen quite a few retailers rely on the rebate at year end to help clear their overdraft or simply give them their profit.

But by far the biggest cost is in equipment. I have seen prices vary wildly when purchased from the same company by independents and franchises. This comes from the kick-back culture. An independent will shop around with a bunch of companies to get the best deal he can. A franchise has a limited number of companies to deal with, because as part of his franchise arrangement he must deal only with approved equipment suppliers. The franchisor gets a kick back from each sale which is simply tacked onto the cost to the retailer.

There's also the situation where a franchisee "takes" a shop from the owner and on top of all the regular fees he pays the owner a fixed percentage of turnover. This, however, cuts out most of the risk for the franchisee as he doesn't need to borrow for equipment or renovations.

All these options have pros and cons. I was personally most comfortable working as an independent, but operating a franchise was more profitable.

phantom_lord

Thanks for the reply Tony!