The off-license business

EPjnr

I now have the license and have found the perfect location for an off license and a unit up for lease so im thinking of venturing into this business.
Has anybody any advice on this business? Profitability? best franchises or go independant? costs etc? please and thanks

bigneacy

I'm sure there's plenty of reasons not to open an off licence, but I would say if you have found a good location and you think it could work for you, then go for it - Huge initial outlay I would imagine?

I have no experience of off licences - aside from working in one and buying drink in plenty.

I personally would keep away from the franchises, I can't see them adding much credibility to the operation. If its in the center of one of the large cities then maybe, outside those areas - waste of money.

Thats my two cents anyway

golfman

EPjnr wrote: »

I now have the license and have found the perfect location for an off license and a unit up for lease so im thinking of venturing into this business.
Has anybody any advice on this business? Profitability? best franchises or go independant? costs etc? please and thanks

Take a look at McHughs on the Malahide Rd. Always wins the Off-Licence of the year awards. Has the best range of beers I've seen in Ireland, loads of fridge space front and back (so they can bring you out a nice cold box of 24 bottles instead of picking up a warm one from the floor), friendly staff and they always have offers on.

I would nearly always go there, however the deals that Tescos have had recently on Stella have been mindblowing! Be careful because I haven't gone into McHughs for about a month because of them..... Is it a sign of things to come?

Good luck anyway!

TheCostumeShop.ie: Ronan

This is a very high risk venture in my opinion. You'll find that often Supermarket chains and large multiples like OBriens Off Licence will be selling beers for less than you are able to buy them for.

You need a big outlay of capital to stock the shop as a reasonable sized shop will need about 80 - 150k of stock on the shelves at all times.

If you decide to go for it make sure your niching and doing something that others arent already doing, there is no room for another me-too business in that sector given the current economic condition.

EPjnr

Update;

I rang the auctioneer he tells me they are looking for 35k rent for the year and he says they have an offer of 20k on it at the minute. I really thought that commercial rates would be alot less now. But it is in a perfect location, its at the entrance into the a 3rd level collage in Limerick. And is situated in brand new business park with a very very busy spar next door and chinese, bank, butchers, etc etc huge amounts of traffic pull in there each day.
Also it willl be the nearest offy to a lot of the student accomadation in the area.
I'll also provide delivery services to the on campus student accomadation and other estates that might have a nearer off license.
There is no tesco in the area to compete with and dunnes stores is ten minute drive away.

My friend is going invest in the venture he has 40k and his father owns a 7day liquor license thats not being used so we will be transferring that.

I've spoke to a man in the business at the weekend and he has being telling me how tough the business has got when competing with the super markets but he still told me there was money to be made in it. (I never listen to 1 r2 people so the more opinions i get the better)
He also said to go without a franchise!!

I know I won't compete with the super markets Ronan and I dont really plan on spending a huge amount on trying to do anything different at the minute apart from a delievry service for students as a huge amount of them now dont have cars. Location alone i really think should be the main factor in the success of this venture. But stock levels of 80-150k at all times? I'm sure there would be no need for anything like that especially at the start. There no point in having more stock in the place than needed especially in this current climate... having money tied up in stock?

Golfman; loads of fridge space- check and friendly staff -check!

TheCostumeShop.ie: Ronan

Sounds like a good location alright but its important to get the fundamentals right. Spar also have big buying power and probably have an offlicence section if its near a college. If i was the franchise owner a choke strategy seems the obvious counter to someone opening up next door.

Student market is primarily how cheap can you sell beer and Smirnoff at? If Spar decide to sell cans 6 cans for a fiver, how will this affect your ability to stay above water.

Cost of capital is high, going higher. Students will have less free spending cash in the next 4 years than ever before, so past data will be unreliable.

Look i'm the last person that would discourage anything entrepreneurial but its important to run the numbers first. It sounds even at 40k investment like you'll be under capitalized, insurance and staff costs will swallow this very quickly. Starting off with half filled shelves might cause customers not to return.

I'd suggest finding several owners of independent off licenses who are located near a spar shop and bring them out to lunch, if they refuse offer to pay for an hour of their time. Ask for their help and advise. Once there not in your competition area they will be happy to help you.

infamous

EPJjnr-you will definatly need at least 80k-150k stock. Have you done any projections on sales. A busy off-license can do up to 30k on a saturday, to be competitive you will need a large variety theres no point going into this half arsed you will end up losing a fortune. 40k wouldn even fit out your shop.

tuxedo

Hi EPjnr,

Check this out:

http://www.facebook.com/?w2m#/profile.php?id=285471788061

Off licence near Scotts in Limerick €3.50 for a 20cl of Huzzar, this would be student heaven... These are the lines you need to follow but be very careful cause where is your profits if that's all they buy!!

EPjnr

Tbh, guys got word of the capital last week and confirmation that we can use the license only a number days ago, havent got any concrete figures together yet. apart from just meeting one off license owner at the weekend. I just put up the thread here to get some quick feedback on the idea/costs/turnover etc before i go any further. i've never had anything to do with the off license business before.

I know 40k wouldnt go far... thats just how much capital we have so far, have no idea what i myself have free to invest at the minute or how much more we will need to raise.

For example i was given the impression 60k would stock it. So please fill free to set me straight.

Expected turnover in recent times? 30k on a saturday i'd imagine is a big city centre off license? That would require quite an amount of staff also! where this offy is located would have its busiest day on a Thursday.

Havent completely ruled out a franchise yet so feel free to give me the pro's and cons.

The spar has an agreement in place that will only ever sell wine and if i opened an offy beside them I would not sell anything except alcohol and cigarettes (unsure about minerals/mixers must check that out) but no crisps choclate etc allowed.

Rent is quite expensive would ye agree? what other costs are involved in the runnung?
-wages
-insurance
-light & heat
-rates?

and start up cost?
Fit out - shelfing & fridges, tills ??

i see that tuxedo but from reading further it was limited amount of stock and they are now selling at 5€.

Guys thanks for the feedback i appreciate it, as i said im completely new to this kind of business and have only being a week looking into it. ronan you are right i will try meet some more people in the business. One thing I do know is this will be the best location for an off license in castletroy at the gates of the university with 16,000 students at a huge amount of traffic around each day. And i know a huge amount of people in the area and in the collage so I just thought this would not be a bad investment, obviously ill get concrete figures together before i make any decision. but for this week ye're opinons will be fine , cheers

slavetothegrind

hope your venture goes well for you, i really do!

my local offie tried the delivery angle but it didn't really take off.much smaller catchment though!!!
Speaking to the owner there were issues with delivery orders regarding the licencing laws.
You would have to be careful here as it could cost you your licence if the gardai believe you are not enforcing the rules. Best to meet with the local sarge and be seen to liase.
Security was another issue.

I do believe staff is so important. the difference between owner motivated and personable and the min wage worker putting in a shift is night and day and keeps me going to the one offie rather than the other two nearby.

Keep a close eye on offers around you and don't be too far out, you wont beat them all the time but at the same time if offie A has 5 for 10 euro on budvar and you have them at 2.89 a bottle..........

Anyway research your heart out and best of luck to you:)

oh yeah, regarding loyalty schemes, i always thought it too much hassle this card stamping buisness and not very productive for you in terms of gathering data.
You should know your regulars, drop them the odd freebee, something small, a sample maybe, a special deal for them on stock near sell by date. would be nice to get their info and monitor their spending ala loyalty card but probably too much for an offie.

EPjnr

Talking to a manager of an offy near the one I’m looking at has a turnover of only 10k a week on the average week and times like rag week, exams finishing...fine weather etc would increase a lot.
If i was to throw a rough figure on it...i'd expect to take in 50% more than that offy, its ran terribly ... always running out of stock... no advertising or promotions, no delivery and not in the best location...
So an average turnover of 15k a week
Vat payable on this will be roughly?
Average mark up expected 15%
Rent= €420 weekly
opening hours 78.5 and for 4 hours a day on 3 of the busy days you would have 2 staff on duty so 90.5 , 40 of which i would work myself, so wages=> 50.5 x 8.65=
€437 wages weekly apprx. + Prsi??
So what else is left to allow for,
light and heat = ?
advertising& marketing= ?
repairs&maintainence = ?
These i would imagine would not cost a huge amount? would i be optimistic in saying that i would have 800-1000eu left each week after everything is paid if i had a turnover of 15k?
For any of ye that can fill in the figures here or throw a little account together I’d much appreciate it…I’ve never being in business before not my own anyway. I’ve ran two businesses before but the owner kept me away from the books side of things, she never wanted me to know how much I was making her to be honest, so it may seem like I haven’t a clue but I guess I have to start somewhere. Hope u guys can help me on this.

TheCostumeShop.ie: Ronan

15K Turnover yikes. OK is this inclusive of VAT as well? Look at the numbers 15k ex vat = 2250 Gross profit. Then you pay staff, light and heat, and the cost of capital for unsold goods sitting on the shelves (around 10% cost of capital), insurance, employers liability, IMRO if you want music in the background, slippage (stealing), broken bottles, items that can't be sold before their sell by date, accountants, lawyers for your employment contract, payroll, book keeping, depreciation on large fridge and its running costs. Have you factored in all the costs? Make sure the business plan is very very good on financials.

Staff wise, double the cost you think it will cost you. You have to pay for holidays (and their replacements wage), their sick days, your own wage (and don't do the oh i can live off profits mistake), bonuses, staff appreciation nights, overtime etc. One staff probably wont be enough as you have to run the business, meet with suppliers etc. 40 hours a week for yourself? I hope you mean just on the shop floor, expect to work roughly 90 hour weeks for the first few years. Thats just part of being the boss.

The reason the other the off license doesn't have enough stock is probably because they can't afford it, rather than they aren't smart enough to re-order.

I have a fair knowledge in this industry and it can't be a great industry to be in, but there are so many threats you havent thought of. Once you get success and people start to notice, human nature means every other off license chain will become interested in the area. If they open up a price war usually follows untill one closes shop. You can do it, but you need a unique selling point on top of your current plan.

EPjnr

Family and friends will be working in the offy when i'm not there. Contracts won't be needed. They will be part time staff that will get paid for when they are there, no holidays or sick leave, its one advantage of this climate, any i've hired in the pub are just glad to have work, no wquestions asked! i'll prob be only able to work 50 max as ill be still running a bar at the weekends, i still have a sharfe of profits and a financial interest in that so have to be there two of the nights of the weekend!
I'm sure your right in everything your saying Ronan, you know a lot more about this business than me. But i want to be realistic, people just love to throw out a big lists of all the costs in business and say 'oh you would have to be mad' But If the financials say im mad fair enough... like imro?? how tiny would that be each week? insurance premium divided by 52? one good thing about the recession is costs are down too ... like staff costs... new minimum wage etc
i've being looking at the amount of 2nd hand fridges that are up for sale from other places closed down... perfect cond etc.. i really question the cost of fit out... esp when both of us looking into this have family in the business of shop fit outs etc..
accountancy costs will be low for me... my uncle is in the business so he'll give the best rate possible...
I can see the offy down the road closing alright after we open if one has to go as they depend on all the students beside our potential premises for business and lets face they are not going to walk an extra 15mins for the same product!

imarugbyball1

I'm totally and completly ignorant of the ins and outs and laws surrounding the offo trade but being a student id wonder would it be an idea to create a totally student centered buisness?

Say only stock only cheap beer/wine and say 3brands of vodka? Only open at 4-10pm, pay students 'comission' to advertise drinks as they do in nightclubs? Focus primarily on delivery etc... Even if that cut your turnover to say 10k a week it would make the rest of your expenses tiny. The corner shop liquor stores in the states and the UK in college areas work like this and it seems to work. With students you can dress "crappy looking" up as "cheap and bohemian, or cheap and funky" and it somehow is cool.

As long as you heavily advertise that you have the cheapest of any brand of beer and vodka and are closest i can assure you students will flock to it. I know, as one myself ALL students are cheap, lazy and alchoholic.

As i said i have literally no idea what i'm talking about and that may very well be illegal or something but just thowing ideas out there.

Live4Ever

Don't know much about volumes, figures etc; but what I have outlined below is golden information for you.

So you're target market is students. Remember this: Students will always buy booze. Recession or no recession. I just finished as a student so take note of this advice.

SPECIAL OFFERS, DISCOUNTS & PROMOS.

- You need to have good deals on beer cans, something along the lines of 6 cans for a fiver/6/ 7 euro.

- Same goes for cider cans. Flaggins of cider are a hit, especially at a low price.

- Jagermesiter are doing naggins now. You should get a deal going for this. Something like a naggin of Jager and red bull or boost for like 6 - 8 euro. Jager bombs are THE drink at the moment.

- Captain Morgan Gold Label Rum. Get a deal going for this Captain Morgan naggin and coke / orange for 6 - 8 euro.

- Same applies for vodka and whiskey.

- Cheaper wine than the Spar is selling. Essential.

- Make sure you always have a healthy supply of Buckfast, believe me this will sell year round. During times like RAG week, end of exams etc this will literally fly out the door so stock up.

They are the big student/ young drinks. If you have them stocked all the time at an affordable price you will do great business.

- ADVERTISE
Walk around the college, hang up leaflets, leave them in lecture halls, put them up in dorms or leave them in porches. Go around the student estates and estates nearby. If you dont want to do this hire a few students and offer them money / some free booze. Get them to hand out leaflets on campus. If you have genuinely good deals then students will notice this. Another point, if you have good deals it will spread vey quickly just by word of mouth.

- Be Friendly
Whoever is working on the tills or in the store needs to approachable and up for a bit of craic when they come in before a night out. If you are cranky and spiteful of students it won't be long before they realize this and go elsewhere.

Just cause you are near a college doesnt mean only students will avail of this offer. Cheap drink appeals to everyone! Best of luck with you're venture!

TheCostumeShop.ie: Ronan

EPjnr wrote: »

Family and friends will be working in the offy when i'm not there. Contracts won't be needed... no holidays or sick leave.

Contracts are a must, relationships, even family ones can turn sour. You can use off the shelf ones but this is an absolute necessity. Also holidays and sick pay are legal entitlements. If employees feel you are screwing them, eventually it will come back to bit you in the ass. You can get off the shelf contracts, just ask your local enterprise board.

EPjnr wrote: »

I can see the offy down the road closing alright after we open if one has to go as they depend on all the students beside our potential premises for business and lets face they are not going to walk an extra 15mins for the same product!

Possibly, but they might also end up selling out to a multiple chain as an exit strategy. Then you have a battle on your hands.

Look i'm not trying to put you off starting a business, but worse than failure in business in mediocrity. If you just about scrape a poor existence from it, its no good. I'd much rather see you do the maths correctly, have a very successful business and then grow to more shops and create more jobs. Costs are high in running a business, estimate them high and you might be left with more profit. Estimate them low and you might have a crippling personally guaranteed loan over your head for the next few years.

If you don't bother with contracts and thats your down fall, Irelands lost another entrepreneur. This whole thread is probably worth it if you take that onboard and ignore everything else.

What you need to be doing is thinking smart. If a student buys one crate of beer a week for three months solid he gets a plaque on the "our heros" wall, thats a cheap way of getting repeat sales (maybe not a socially responsible one, but hey). Could you arrange standing orders? Person orders their requirements (12 cans per week) in advance so you take less risk buying in stock you can't afford and then offer them a discount on every 4th continuous week.

EPjnr

Do part time staff have much legal entitlements? in terms of holidays/sick pay etc
i see where ur coming from totally and ive being expressing all views with the guy that was planning on investing and he pulled out this evening... but how and ever i never give up... he wants me to find another potential business opportunity for us!!
But i also have one other potential investor... these guys have great faith in me from my success in running other businesses and believe it or not every risk i take is well calculated! if the feedback i got here and from other off licence owners had being good i would have went on to a business consultant and accountant, but by this little bit of research i haven’t spent a cent of his money or my own, just a bit of time!
I still haven’t gave up on the idea... if the 13 other off licences in castletroy can turn over a profit ...then this one (with more potential than any of the others) I’m sure can too! I’ll have a lot more loyalty than any of the others as i would know 100's of students around and would form some kind of relationship with the su class reps etc.. my old entrepreneurship lecturer would be delighted to have her class work on a practical project like coming up with a unique marketing method for my business and that way get free ideas and also continuously interacting with collage groups building up a good customer base etc... I just think I would have thee best run offy in the best location in castletroy which surely would be quite profitable... ill still try get talking to other offy's around maybe there is some of the, taking in 20-25k ... that would then have a potential weekly gross of 3750, im sure this would look a lot more appealing ronan? I'm not giving up on the idea yet. and cheers to the two students/graduates for your advice, i'm just after graduating myself (from this particular collage).. so my collage drinking days are just coming to an end so i know as well as anyone what students like and unfortunately for me its cheap beer and spirits and your right its a lot about the price but ill try to compete in other ways than just price like ronan suggested.. and every student will be treated as if they are one of my most important customers... thats one reason why the pub ive being involved has being so successful... treating customers properly including young customers who wouldn’t usually get this treatment and hence appreciated it more than anyone.
Anyone 100k + plus to invest??? if u did what business would u invest in? (i know not an off licence anyway):P

TheCostumeShop.ie: Ronan

EPjnr wrote: »

Do part time staff have much legal entitlements? in terms of holidays/sick pay etc
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Yes, 8 days, hours etc for every 100 worked.

I love your enthusiasm, I've got a feeling you'll go far. You probably should start building a team of mentors, college lecturers etc. I was reading your other thread about a dodgy scam you wanted to sign up for, but with time you'll start to weed out the good projects from the bad.

Start small and when you find something that works leverage it up. Stay on boards and keep us updated as you go.

MiciG91

EPjnr Where exactly is this offie going to be ? I'm in college in Ul and at the moment the two offies we go to is the fine wines by superdine and carry out by the pagoda chinese restraunts.

How much closer would you be ? I live in Elm Park and both are only 5 minutes away and do offer good deals,cans of Carling 1 euro, smirnoff ,naggins 4 euro.

I cant picture where you'r going to be located ?

Kevin Ryan

I used to be in the pub and off licence business. I went the independent route at first. Being new to the off sales business at the time I got a bit of a shock. You could take a thousand euro during the day and have lost money cos the predominant sales would have been spirits which at the time only had a 5% margin. Staff, LHP etc would have screwed the margin.
I then went with a Next Door franchise owned by the VFI. Great people to deal with but stocked me with the wines that sold in D4, not in a small town.
The guy that bought the business from me changed over the franchise to Carry Out. Owned by Barry's of Cork who bought out Galvins last year. Their development guy is called Ger Donnelly. Ger is one of lifes good guys. I did my first wine course with him before he got this job. A gentleman. I am assuming he is still with Barrys.
His job is to help with design, projections, business plans etc. If the numbers don't add up, he will tell you. I know that they aim for 20% gross margin and they do good point of sale material, have plenty of offers and advertise on the radio a lot.
I don't mean to sound like an advertisement but I would trust Ger.
I know from experience that wine and beers have the best margin so its a shame you cannot do wine. i would estimate your stock level to be 2 weeks supply at any given time so you need to know your potential turnover.
In the good old days Guiness used to give a grant towards walk in fridges and signage.
Downside of a college offie is that there is nobody passing your door for 20 weeks of the year. What then?
Good luck anyway. Up Tipp.
Feel free to pm me your number and I will have a chat but I would definitely call the franchises and get their input.
Part time staff have the same rights as full time staff. You may hire someone who doesnt want to be on the books, blah blah blah. However, again from experience, if NERA come in your door, buy a family size jar of vaseline.

EPjnr

ha, cheers ronan. im sure you've seen some of my threads and wondered is this guy for real... but anything that goes on boards is just ideas, to test the water, get quick and free feedback, often from experienced people, sometimes i listen to it other times i dont. i still aint given up on that offy venture, so if anyone else has anything to add please do.

whats your business ronan if u dont mind me asking? apart from the obvious:D impressive website!
my story to date i posted on this tread a few weeks back http://www.boards.ie/vbulletin/showthread.php?t=2055399358&page=8

EPjnr

castletroy park hotel business park. at the main gates beside plassey... the new spar and boi, chinese , doctors, delish cafe, hotel etc that opened in the last 2years ... it would be nearest offy for collage court , plassey, dromroe, thomond, cappa villa etc and then deliveries to the likes of youself

cheers kevin, may just to that

TheCostumeShop.ie: Ronan

@EPjnr Ah i don't wanna Hi-Jack the thread and make it about me. I own the businesses below in below signature, CEO for Zatori Results and Angel invest in my spare time. Also i'm only a couple of years older than you.

EPjnr

doing well for urself ronan, hopefully ill have caught up to in those 'few' years time.