Running a convenience store can be a lucrative and fulfilling business, but it’s important to be aware of the ongoing operating expenses that come with it. By understanding these types of ongoing expenses upfront, you can plan accordingly and potentially save your money.

If you’re seriously thinking about how to open a convenience store, you’ll need to understand the startup costs and long-term expenses that come with it. In this article, we’ll take a closer look at the costs associated with opening and operating a convenience store, bodega, or corner store. This includes both the large upfront costs as well as the common recurring operating expenses you can expect to find.

Learn more store operation tips for keeping your cash secure from Integrated Cash Logistics’ blog.

“High’s Convenience Stores began using Integrated Cash Logistics in April of 2022 after previously utilizing several different armored car providers. ICL’s service improved High’s cash management while directly addressing operational challenges and hourly labor costs, with no capital outlay.

ICL’s CashSimple™ service now resides at every High’s location. Unlike our previous service, ICL’s solution focuses on improving cash management and availability by providing banking flexibility, zero cash liability at the store locations, cash-for-cash change orders, and easier reconciliation/ reporting.”

– Michele T., Senior Vice President, High’s Stores

How Much Does It Cost to Open A Convenience Store?

The cost of opening a small convenience store is substantial, with most estimates for convenience store set up in the tens of thousands of dollars (and depending on the details of your situation, can easily exceed $100,000).

One significant expense is obtaining a physical space for your store. You will either need to rent an established space, or build out your own property. Keep in mind a prime retail location is likely to come with a higher price tag. Building your property via fixed-rate financing can provide more overall stability in operating expenses as rents can–and often will–increase with each lease agreement.

Another significant potential upfront cost is franchise fees. If you’re looking to open a “name brand” franchise location, you should expect to pay a significant sum–for instance, 7-Eleven®️ provides a franchise fee ranging from “$50,000 to $750,000.” It should be noted that some franchise models account for many large upfront expenses like securing a property or purchasing inventory, so this figure isn’t necessarily an “in addition to” expense.

These convenience store start-up costs provide a steady baseline for your monthly expenses, but that’s just a portion of convenience store operating expenses you’ll need to account for. Factors like staffing, inventory, point-of-sale services, cash management, and more can all have a large impact on your location’s profitability.

Convenience Store Operating Expenses to Budget For

As you’re planning a convenience store budget, there are several common expenses you should be aware of. Some expenses like securing a location and operational infrastructure (ex: cash registers, lighting, security measures, etc.) are generally a one-time upfront cost (though payment may become recurring if financed or rented).

Other convenience store operating expenses, like permits and licenses, will depend on the state you’d like to operate in but are typically a yearly or semi-annual payment that you’ll want to set aside funding for. The rest, like operating costs, staffing, and inventory are rolling expenses that you should expect to actively manage on an ongoing basis. Let’s take a closer look at each of the expenses below:

Location

Location is often a make-or-break factor for convenience stores. An ideal location has significant foot traffic, easy access, limited competition, low overhead, and solid long-term prospects as the area develops.

The location of your store can significantly influence your cost of operation. Depending on where you plan to open, you may be subject to state and/or municipal taxes that can vary from year to year. Other factors you’ll want to consider include:

  • Rent: The price of rent for your location is only fixed for as long as the terms of your lease. While commercial real estate developers may be willing to provide some leeway for a long-standing strong tenant, they too are looking to maximize profits and may offer terms that will significantly raise your overhead.
  • Location Insurance: Business insurance protects you from costs associated with vandalism, property damage, customer injury, and more–but it’s also typically tied to the overall value of your property, and provider rates may vary.

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Permits and Licenses for Convenience Stores

Permit and licensing fees are another expense you’ll need to keep in mind when operating a convenience store. The list below outlines some of the most common licenses and permits required for convenience store operations.

  • Business License: A business license is a legal authorization to operate in your state or municipality. This typically comes with a set fee and must be renewed yearly.
  • Occupancy Permit: Occupancy permits are used to ensure the building you’re operating in is up to the local building code. Typically this is a one-time expense unless additional work to modify the space is completed.
  • Lottery Retailer License: If selling lottery tickets or other state-sanctioned gambling, you’ll need to obtain a lottery retailer license. This typically requires yearly renewal and some states may require you to pay for bonding costs.
  • Alcohol/Liquor License: Alcohol and liquor licenses typically range from a few hundred dollars to several thousand dollars and must be renewed annually.
  • Tobacco License: Like alcohol, you’ll need a license to sell tobacco products. Depending on the state you operate in, this license will typically last 12 to 24 months and typically costs less than a thousand dollars.
  • Gas Station License: If your property has gas pumps on the premises, you’ll likely need a license to certify safe operation. This is typically a yearly expense.
  • Additional City/State-Specific Permits: Certain states and municipalities will have additional permitting and licensing requirements not covered in the list above–so be sure to do your research and contact your local government for further guidance.

Operating Costs

Operating costs are exactly what they sound like: the day-to-day expenses associated with running your business. They range from basic supplies to literally keeping the lights on. Common examples of operating costs include:

  • Utilities: Like the utilities of your home, this includes costs associated with electricity, water, garbage removal, heating, air conditioning, and sometimes natural gas. When controlling for seasonality, these expenses are typically consistent (though with some small month-to-month fluctuation.) You’ll also want to consider refrigeration costs and additional storage space costs under this category.
  • Repairs/Maintenance Fees: While solid upkeep will help longevity, eventually equipment will break down or need replacement. These expenses are generally unplanned, but should still be budgeted for.
  • Supplies: This accounts for essential business supplies–pens, printer paper, receipt rolls, toilet paper, hand soap, etc.
  • Security: This category covers fixed expenses like security systems, in-store cameras, and security personnel if needed for staff and customers.


A hand holding a credit card to tap and pay at a cash register of a convenience store.

Cash Management Solutions

While it’s great to have money flowing in, you’ll also need to account for expenses associated with managing both digital and cash payments.

These expenses may not get as much attention as big-ticket budget items like rent or inventory, but the costs and associated fees can add up and impact your overall profitability. Additionally, there’s the attention cost of keeping up with it all as most cash management solutions are not offered all under one roof. Some common cash management expenses include:

  • Bank Membership: Depending on the financial institution, you may be subject to business checking fees, monthly service fees, insufficient funds charges, and a host of other “small” charges for keeping your money secure.
  • Cash Safe or Deposit Box: This includes not only the expenses associated with purchasing a secure safe or deposit box system but also the cost of staffing needed for the end-of-shift register reconciliations and bank deposit runs.
  • Liability Insurance: It’s common for businesses to purchase additional liability insurance to cover events where cash may be lost or stolen, or other unexpected accidents occur.
  • Accounting and Records Software: Accounting and financial management software can be either a one-time expense or offered as a recurring monthly subscription payment.

Staffing

Staffing costs are a critical piece of your budget. You’ll need enough set aside to hire, attract, train, and retain effective help for your convenience store. A quality staff keeps customers happy, the store in good condition, and can help minimize theft-related losses.

  • Salary and Wages: The most straightforward staffing expense, refers to how much you’ll pay staff per hour. Keep in mind this expense will likely need to fluctuate depending on job market conditions.
  • Insurance: Though many convenience stores will depend primarily on part-time workers, employers need to provide health insurance benefits for full-time employees–which can be a significant expense.
  • Worker’s Compensation: Staff injured in the line of work are eligible for workers’ compensation. Many employers pay for monthly worker’s compensation insurance to safeguard against these unplanned–and often costly–claims.
  • Payroll Taxes: Payroll taxes are another important factor to consider with staffing costs. Employers are required to pay their share of unemployment, Medicare, and Social Security taxes.



Empty checkout aisle with cash register and snacks.

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Inventory

A beautiful, fully staffed, and equipped space isn’t going to do a lot for you if you don’t have goods to sell. Inventory management is a substantial operating expense for convenience store owners. This category of convenience store operating expenses covers not only material goods, but also can apply to costs associated with storage, taxation, transportation, and other services.

Common inventory categories for convenience stores include:

  • Snacks and Beverages: This refers to the chips, candy, jerky, soda and other little convenience store treats commonly filling the aisles of a convenience store. While the initial inventory cost will be high, over time there will be some balance in keeping shelves stocked.A typical convenience store is sourced by vendors with large warehousing spaces who charge a set rate per item and make regular deliveries. Many of these items are easy to store dry goods, but there may be additional storage, equipment, and preparation considerations needed for goods like hot sandwiches, fountain drinks, espresso machines, etc.
  • Produce (where applicable): Produce includes fresh goods like fruits, vegetables, and meats. These products have shorter shelf lives and require additional storage and preparation space for safekeeping.
  • Local or Regional Goods: Many convenience stores set aside space for local products–this can be anything from artisan soaps to cookies from a local bakery. These products often have independent distribution systems for monitoring and managing inventory. Keep in mind, it takes time to deal with additional vendors so this can present some “hidden” labor costs.
  • Tobacco Products and Alcohol: Distribution of tobacco products and alcohol is typically handled by a few dedicated vendors in an area. These distributors will carry most major-label products, but you may need to establish additional vendor relationships to procure local craft beers or other less-established products.

Keep in mind, wholesale product distributors are a service–they store goods, make deliveries, and in some cases stock products on your shelves. These expenses that must be accounted for–and passed on to customers–to remain profitable.

Point of Sale (POS) Services

We’ve come a long way from hard currency-only cash registers. Modern point-of-sale systems include hardware like scanners, chip readers, monitors, and cash register drawers, but pair them with software systems that make monitoring sales and implementing price adjustments simple. PoS services can be purchased outright, or you may choose to rent equipment and pay a recurring service fee.

Beyond hardware, potential PoS and software-related expenses include:

  • Sales Management System: Many cloud-based sales management software systems are provided as a service with monthly fees (typically under $200 monthly).
  • Card Processing Fees: Many PoS solutions will charge a set fee per transaction (generally 0-3 percent). This fee is on top of already-established fees set by credit card providers. High-volume retailers may be able to negotiate lower PoS processing expenses.
  • Payroll Management Service: While not strictly associated with PoS systems, payroll management software services are another common monthly expense for convenience store owners.

Streamline and Save On Your Convenience Store Cash Expenses with Integrated Cash Logistics

Running a convenience store might seem simple at first glance. But as you can see, a closer inspection of convenience store operating expenses shows that there are a variety of costs–big and small–that can chip in to your store’s profitability. How much a convenience store makes will highly depend on how well you manage its expenses.

To get ahead, you’ll need to find ways to keep fees and unplanned downtime to a minimum. Integrated Cash Logistics’ Cash Capture Technology can help with this by streamlining cash management processes and minimizing business banking-related fees. Ready to learn more about how ICL can help you? Schedule a demo or contact an ICL representative today.