Convenience Store Business Overview

At their heart, convenience stores represent one of retail’s most enduring promises: making everyday life easier for busy customers. These essential businesses have mastered the art of accessibility, strategically positioning themselves where people live, work, and travel to provide quick access to daily necessities. Whether it’s a morning coffee run, a midday snack, or late-night necessities, convenience stores serve as reliable neighborhood pit stops that keep communities running smoothly. From traditional corner shops and franchise locations to modern hybrid stores combining gas stations, food service, and other amenities, the industry has evolved to meet changing consumer needs while maintaining its core mission of convenient, hassle-free shopping at any hour of the day.

The industry includes several ways to own and run a convenience store:

• Traditional Independent Store: A store you own and operate yourself. You choose what to sell and how to run it. These stores usually stock basic items like snacks, drinks, tobacco products, and household supplies. Many operate in neighborhoods or along busy roads where people commute.
• Franchise Store: A store that operates under a well-known brand name like 7-Eleven or Circle K. While you own the store, the brand provides training, marketing, and a proven business system. They tell you how to operate and what products to carry.
• Gas Station with Store: A combination business selling both fuel and convenience items. These stores make money from gas sales and products sold inside the store. They work well on highways or busy street corners.
• Hybrid Store: A convenience store combined with other businesses like a fast-food restaurant, car wash, or ATM services. This setup helps bring in money from multiple sources and attracts different types of customers.
• Urban Mini-Market: A smaller store in busy city areas focusing on ready-to-eat foods and essential items. These stores adjust what they sell based on what nearby residents and workers want.
• Rural General Store: A larger store serving small towns or country areas. These stores stock more items than typical convenience stores, including groceries, car supplies, and seasonal products. They often become places where local people gather.

Industry Statistics

The convenience store industry (NAICS 445120) consists of retail establishments providing quick-access shopping for daily necessities. These stores blend grocery items, prepared foods, beverages, and basic household supplies with swift service. The industry transformed from simple corner stores in the 1920s into modern retail hubs. The addition of self-serve gas stations in the 1970s reshaped the industry, followed by the introduction of prepared foods and expanded fresh offerings in the 2000s.

Single-store operators rule the convenience store domain. The top two chains hold less than 40% of the market share, as indicated by IBISWorld. In fact, mom-and-pop small business operations employing fewer than five people account for 68.1% of total stores.

Market Size: Annual sales reached $860 billion in 2023. The industry encompasses over 150,000 stores across the United States, ranging from independent operators to large chain locations. These establishments employ over 2.3 million people nationwide.

Market Trends: The industry demonstrates steady growth, with sales increasing by 1.6% in 2023. The industry is projected to grow 2% annually through 2026.

Tobacco products are a major driver of convenience store sales. With a greater emphasis on health, the number of smokers – and the demand for cigarettes – is anticipated to drop and could impact store earnings. Conversely, the demand for healthier grab-and-go food options is on the rise. Shrewd business owners will keep a close eye on market trends, demographics, and other factors to customize inventory for primary clientele.

Looking ahead, projections suggest continued expansion through 2028, driven by:

• Adding new ways to pay using phones and apps
• Offering more prepared food choices
• Stocking healthier food options
• Installing self-checkout machines
• Setting up charging stations for electric cars

Also See: Ideas for Naming a Convenience Store

Things To Consider Before Starting a Convenience Store

Before spending money on a convenience store business, a few important things can affect success in this industry.

1. Research Your Local Market

Before opening a convenience store, understand your potential customers and competition. Study nearby neighborhoods to find out:

• Count the homes and apartments nearby – more people usually means more customers
• Watch traffic patterns – when are people driving by? Are they stopping?
• Visit other convenience stores – how busy are they? What do they sell?
• Talk to local residents – what products do they need?
• Notice where people work – office workers and construction crews often buy lunch.
• Look for gaps in service – are there areas without easy access to basic items?

2. Location and Property Requirements

The success of a convenience store often depends on where it’s located. Focus on these factors:

• High-visibility spots with easy access
• Adequate parking space
• Safe, well-lit areas
• Proper zoning for retail use
• Space for storage and deliveries
• Americans with Disabilities Act (ADA) compliance
• Building size (typically 2,000-3,000 square feet)
• Traffic count on nearby streets

3. Licenses, Permits, and Regulations

Convenience stores must comply with numerous regulations and obtain specific permits:

• Basic business permits from your city
• Special permits if you want to sell:
  • Tobacco products
  • Beer and wine
  • Hot food
  • Lottery tickets
• Health department approval for food handling
• Fire department safety checks
• Training certificates for you and your employees
• Regular inspections of your scales and equipment

4. Insurance and Liability Protection

Proper insurance coverage protects your business from various risks:

• Accidents that happen in your store
• Damage to your building or equipment
• Employee injuries at work
• Problems with products you sell
• Theft or robbery
• Times when you might need to close temporarily
• Delivery vehicles if you offer that service
• Issues with employees
• Major accidents or incidents

5. Security and Loss Prevention

Implementing strong security measures helps protect your business, employees, and customers:

• Install cameras where people can see them
• Keep your store bright inside and out
• Use safes that limit how much money employees can access
• Install panic buttons for emergencies
• Create clear rules for handling money
• Train employees on what to do if something goes wrong
• Keep track of your inventory daily
• Use mirrors to see around corners
• Keep limited cash in registers
• Have written plans for robberies, fires, or other emergencies

How Much Can a Convenience Store Make?

Annual store sales vary widely in the convenience store industry. Small rural stores might bring in $250,000 to $2 million per year, while larger stores in busy areas often reach $10 million or more, especially those with fuel stations or pharmacy services. However, a typical convenience store generates about $5 million in annual sales. What matters most isn’t the total sales, but how much money you keep after paying all expenses. On average, store owners keep about 6.5% of their sales as profit.

Your total income can increase significantly through additional services. Many stores boost their revenue with:

• Fuel sales
• ATM fees
• Money transfer services
• Food service
• Car wash facilities
• Lottery sales

Here’s what the numbers look like for an average store making $5 million in sales:

• This equals about $27,083 per month in profit
• Your annual profit would be about $325,000 ($5 million × 6.5%)

How Much Does It Cost to Start a Convenience Store?

According to the National Association of Convenience Stores (NACS), starting a convenience store requires an investment between $250,000 to $3 million or more. The total cost varies significantly based on your approach to entering the market and location.

Building a new store from scratch typically costs between $1 million to $3 million or more. This option provides complete control over design and location but requires the highest initial investment. These costs include land purchase, construction, new equipment, and full inventory setup. In contrast, buying an existing store might cost between $250,000 to $1 million, offering a faster path to opening but possibly requiring renovations or equipment upgrades. A third option, leasing a location, usually requires $350,000 to $750,000 in startup costs, reducing initial property expenses but still needing funds for renovations, equipment, and inventory.

Your total startup costs will include several major expense categories. Building and location expenses cover purchase costs, lease deposits, and any necessary renovations, signage, parking lot improvements, and security systems. Equipment and fixtures form another substantial portion of startup costs, including refrigeration units, point-of-sale systems, security cameras, shelving, and storage units. Initial inventory represents a significant investment and basic supplies needed for daily operations. Administrative costs add another layer of expense, including business licenses, permits, insurance deposits, legal fees, and accounting setup. You’ll also need working capital to cover 3-6 months of operating expenses before your store becomes profitable.

Additional costs might apply depending on your business model. If you choose a franchise, you’ll need to pay franchise fees. Stores with fuel service require specialized equipment and permits. Some owners also invest in food service equipment or car wash facilities to create additional revenue streams.