Convenience Store Business Plan, With a Projection

A convenience store business plan isn't planned product by product: a store carries a few thousand items, so the plan works in categories and in dollars of sales. Drinks and snacks bring most of the money, dairy brings people in the door at a thin margin, and a coffee bar earns the most on each dollar. Against that sit rent, wages and the electricity for a wall of coolers, which run whether anyone buys or not. In the example below, a neighborhood store in Tennessee opens with $138,600, breaks even in its fifth month, ends the first year about $11,800 ahead on $388,500 of sales, and makes about $4,400 each month once it sells $40,000 a month, before the owner's pay. Below is each part of the plan, the first year month by month, the startup budget, and a free template.

The short version

• Describe the store in a paragraph: the street, who walks in, what they come for, the goals.
• Plan sales by category, in dollars: drinks, snacks, dairy, grab-and-go, coffee, household, local products.
• Cost each category per $100 of sales: what the goods cost, plus card fees and shrink.
• Fixed costs are rent, wages and the coolers' electricity, every month.
• Licenses: a business license, a sales tax permit, a retail food permit, and tobacco, beer, lottery or SNAP if you sell them.
• Budget a full opening inventory and the working cash to carry slow first months.
• TaroStack keeps dates on dairy, records every loss with a reason, and lists what to reorder. More below.

Part 1: the business description

Bluff City Market, a made-up convenience store in Memphis, Tennessee, I use in these examples, writes:

Bluff City Market is a 2,400-square-foot neighborhood store open from 6 a.m. to 10 p.m., selling cold drinks, snacks, dairy and eggs, fresh bakery and grab-and-go food, coffee, household basics and products from Memphis makers. In its first year it aims to reach $40,000 of sales a month and keep shrink under 2% of sales.

Part 2: licenses and permits

In most places a convenience store needs a business license from the city or county, a sales tax permit from the state, and a retail food permit from the health department or the state agriculture department, depending on the state, which inspects the coolers, the storage and any food made on site. Each extra line of business brings its own license: tobacco and vapor products, beer and wine where the state allows grocery sales, lottery tickets, and SNAP, which means applying to the USDA and stocking enough staple foods. The plan budgets $2,000 for licenses and permits, and leaves tobacco and beer out of the first year until the permits are in hand. This is general information, not legal advice.

Part 3: what each category earns

Each category is planned per $100 of sales. Its variable cost is what the goods cost plus 2.5% card fees and 2% shrink: theft, damage and dates gone by.

At full speed the store sells $40,000 a month and keeps $17,900 after variable costs, 44.8%. Drinks bring $7,125 of it, snacks $4,095 and the coffee bar $2,820 on a tenth of the sales; dairy brings $1,275 on an eighth. Milk and eggs aren't there for their margin: they're why someone stops in, and the drink and the snack are what they add. How contribution is worked out, and why it beats gross margin for a plan, is in contribution margin example, and the difference between markup and margin, which matters when pricing off a vendor's invoice, in markup vs margin.

Part 4: the first year, month by month

Fixed costs are $13,500 every month: rent ($3,800), wages for part-time clerks ($7,200), utilities, coolers and lights ($1,400), insurance ($400), the register and software ($200), and other costs ($500). Sales start at 55% of full speed, as the neighborhood finds the store:

The year's sales are $388,500 and the profit $11,774, before the owner's pay. The store breaks even at about $30,200 of sales a month, the fifth month. The first four months lose $9,096, which the working cash covers. At full speed, $4,400 each month is thin: 2% more shrink, another $800 every month, takes nearly a fifth of it, which is why the plan counts often and watches dates. More on where shrink comes from is in what is expired stock.

Part 5: the startup budget

The opening inventory is the biggest line: a few thousand items, two weeks of each, before the first sale. The $108,600 spent before working cash is a long payback: the first year earns $11,774 of it, and at $4,400 a month the rest takes about 22 more months. Used coolers, a smaller opening order on slow lines, or a store that already has coolers in place are where the budget shrinks.

Part 6: running it

Vendors deliver on routes: soda, snacks, bread and milk often come on the vendor's own truck, stocked onto the shelf, while the rest comes from a wholesaler once or twice a week. Each delivery is checked against the invoice. Dairy, bread and grab-and-go are rotated oldest first. The shelf is counted in sections, the costly and fast items most often. How to run a count is in how to count inventory, and when to reorder in par level vs reorder point.

Get the template

Download the convenience store business plan workbook. Four sheets: your categories, each per $100 of sales with its variable cost and hundreds a month at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

A plan in categories hides the items. Three thousand of them, from five route vendors and a wholesaler, milk with a date every few days, prices that creep up on one invoice at a time, and a shrink number of 2% that nobody measured. By the time the month's profit is short, which milk went out of date, which vendor's case came short and which items walked out are already gone into one figure.

How TaroStack does it

TaroStack keeps dates on dairy, records every loss with a reason, and lists what to reorder.

Dates, oldest first. Milk, bread and grab-and-go keep their dates, an alert comes before a date runs out, and the oldest goes first, so a date gone by is caught on the shelf, not at the count.

Losses with a reason. Every adjustment carries its reason, lost, damaged, expired, spoiled or found, so shrink is reported by reason, item and site instead of plugged in as 2%. Counting on a phone by barcode suggests what to count first, by what it would cost to be wrong.

Reorders and deliveries. Suppliers keep their lead times and minimums, a reorder list in days of cover says what to order from each, and deliveries are received with or without a purchase order. A photo of a vendor's invoice is read into rows to check before anything is saved, and a price-creep report shows which vendor's prices are rising.

Counts, losses by reason, expiry, reorder lists and margin reports are on every plan, from $49 a month, with no limit on items; TaroStack connects to Square. A second store is on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

How much does it cost to open a convenience store?

In the example, $138,600: $45,000 of opening inventory, $35,000 of coolers, freezers and shelving, $15,000 of build-out, and $30,000 of working cash are the biggest parts.

Is a convenience store profitable?

Thinly. In the example, $4,400 each month at full speed on $40,000 of sales, before the owner's pay, and the first year ends about $11,800 ahead.

What licenses do you need for a convenience store?

A business license, a sales tax permit and a retail food permit, plus separate licenses for tobacco, beer and wine, lottery and SNAP if you sell them. They vary by state and city.

How do I write a convenience store business plan?

Describe the store, plan sales by category in dollars, cost each category per $100 with card fees and shrink, add the fixed costs, project the first year month by month, and budget the opening inventory and working cash.