The convenience store is the one-stop shop that busy Americans depend on to satisfy their cravings for snacks during their daily commutes and when they need to restock on those odds and ends between trips to the grocery store. It’s an important part of the modern landscape, and it’s one that isn’t going anywhere any time soon.
Making the Decision
The very first decision you need to make as you plan for your convenience store is whether you want to buy into a franchise. Investing in a convenience store franchise, such as Grand 7th for example, can be a sensible way to jump start your financial goals because it comes with automatic name recognition, access to marketing materials, on-site training, and other support from the company headquarters that should ease some of the uncertainties that arise in opening a business.
As attractive as it is, in reality, the biggest barrier to entry for a prospective franchisee is the initial startup cost. Franchisors typically ask for an initial franchise fee for the right to operate under their brand. There’s typically a reoccurring royalty fee taken as a set percentage of your store’s revenue, as well.
If the costs of investing in a franchise are outside of your startup budget, or if your entrepreneurial spirit is guiding you to strike out on your own, you can get to work on outfitting your own independent convenience store. This will give you the freedom to sell exactly the types of items that you want to and to do business on your terms, without the restrictions handed to you by a corporate franchisor.
Convenience is at an all-time high
Today’s consumers are time-constrained and busier than ever. They want more from one location, whenever they want it. Convenience stores are feeding this 24/7-consumer demand, which is showing no signs of slowing down. With an expanded product selection, round-the-clock operations and numerous locations, convenience store franchises are exactly what the masses are craving.
More products mean better business
Franchises that focus on selling one type of product or service (fast-food franchises, for example) have a limited customer base. On the other hand, owning and operating a business that offers multiple products will allow you to meet a variety of customer wants and needs, which keeps traffic flowing day and night. People stop by a Grand 7th store for all kinds of products. When it comes to franchise ownership, the more options for them, the better business is for you!
Market Size
Based on the most recent available figures, there are over 155,000 convenience stores in operation in the United States, and the industry has effectively doubled in size over the last 30 years. American convenience stores serve an estimated 160 million customers every single day which is nearly half the American population. With these facts in mind, it’s easy to see why entrepreneurs view buying and running a convenience store as an excellent vehicle for business and financial success. Of course, success is never guaranteed, and a poorly run convenience store can fail just as quickly and completely as any other new business that’s not managed effectively.
So, it’s vital for entrepreneurs or investors interested in entering the convenience store industry to go about the process strategically, based on well-researched knowledge and, ideally, following the example of successful convenience store owners before them. That’s where franchising comes in, and why it’s such a popular way to enter this thriving industry with improved chances of success.
Why consider opening a franchise convenience store?
More than 37 percent of the convenience stores operating in this country (over 57,300 locations) are connected to a chain. Most of these are franchise locations, with the top two franchises, 7-Eleven and Circle-K, accounting for more than a quarter of them.
There are many benefits that come with buying into an established franchise as opposed to buying a privately owned convenience store or starting fresh with a brand-new brand:
- While startup costs of buying into a franchise can be equivalent to buying an established store, they are far lower than what you would need to build a brand-new store from the ground up.
- All other things being equal, the owner of an independent store will usually find it takes longer to achieve profitability than does the franchise owner.
- The franchisor will generally offer significant guidance and support, especially in the early stages of the store’s opening, because their success is directly tied to the franchisee’s success. This can be especially helpful for entrepreneurs with limited or no experience operating a convenience store.
- The franchise’s established brand and national marketing efforts allow new store owners to hit the ground running with an established customer base and visibility that a brand-new store lack.
- Ongoing support and guidance from the parent company can help franchisees weather unexpected storms as they arise (and they always will). Private store owners will need to establish their own support systems for these occasions.
The franchise agreement is signed…What’s next?
Once the franchise agreement is signed, buying and operating a convenience store franchise is really very much like buying and running a private location (with the exception that many of your day-to-day decisions and procedures will be dictated by the franchise agreement and operating policies).
In other words, as a convenience store franchisee, you’re still responsible for:
- Staffing your store with qualified individuals who will offer quality customer service and carry out their roles responsibly.
- Stocking your store strategically to accommodate customer needs while supporting a healthy profit margin and goals established by the parent company.
- Facilitating the cleaning and upkeep of the building and property, as well as necessary security measures, so employees and customers alike enjoy a safe, clean, and inviting experience.
- Managing all day-to-day details of running a retail store, including the inevitable emergencies or unexpected inconveniences, either by personally acting as manager, or by installing an effective management team you can rely on.
The keys to successfully buying and operating a convenience store franchise are the same as any other similar retail business:
- Hire a team of employees who will delight your customers and maintain profitability, then treat them well.
- Keep a close eye on the financials and be proactive rather than reactive when problems come to light.
- Build up a team of professionals to support your business. (While the franchisor may provide access to individuals or information to help with these matters, involving your own professional business broker, accountant, attorney, or real estate agent can be very valuable, especially in reviewing and negotiating the franchise agreement itself).
- Focus on what’s best for the customers