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Sr. Member
Apr 2, 2009
851 posts
232 upvotes

Convenience Stores

I'm looking at purchasing a convenience store, does anyone have any experience with these? It seems like it's a business dominated by immigrants and I was wondering why other than it's an easy business to get into.

I understand the hours are long but other than that I don't see any drawbacks. There are 4 that are for sale in my city. From the information I have been able to research on my own and gather from RE agents, it's a cash business that's main source of sales are from cigarettes/lotto. (Anywhere from 40-60% of the business is cigarettes)

Obviously I need to do my due diligence but all 4 of these stores are claiming weekly sales of anywhere from 10-15k and lotto commissions of anywhere from 30-45k/year. 3 of the 4 stores claim net income is 100k/year (without labor costs) The one that doesn't claim 100k is stating about 75k net income.

Obviously lotto income is verifiable as is their sales of cigarettes.

It just seems if that these stores were that profitable why are they dominated by immigrants? Wouldn't everyone try and get into them? I'm also don't want to be in a position where I purchase a business that is dominated by immigrants and I am considered an "outsider" or something and I am shunned by that community and be in a spot where it makes it difficult for me to get supplies, join buying groups, organizations etc.

Also these business are all for in the $200k range. That would seem to correlate with net income figures at 2x net income. if they were dead business would they ask the standard 2-2.5x rate?

It would be rather unusual for a white guy to buy a convenience store but my industry died and I am looking at purchasing a business.

Does anyone know anything?
17 replies
Deal Addict
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Mar 29, 2008
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-low (almost no) barriers to entry; lots of competition
-loooooooong hours if you want to make money
-can be dangerous depending on location and hours

-you don't really need to buy an existing one. you could simply start one from scratch - find a properly zoned location and buy shelving and inventory. Your most expensive purchase would probably be the refrigerators. Other than inventory, you can probably buy everything used.

-the business is ideally run by a family. Just one person, and you can't do all the hours by yourself. Put in employees and there goes your profit (plus theft - not necessarily from the employees but because they just don't care as much as you).
Banned
Nov 27, 2006
2200 posts
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Toronto
lotto sales don't really make you any money. they are just a value add - when someone comes to buy a lotto ticket they might buy a drink or a chocolate bar.
Sr. Member
Apr 2, 2009
851 posts
232 upvotes
random pattern wrote: -low (almost no) barriers to entry; lots of competition
-loooooooong hours if you want to make money
-can be dangerous depending on location and hours

-you don't really need to buy an existing one. you could simply start one from scratch - find a properly zoned location and buy shelving and inventory. Your most expensive purchase would probably be the refrigerators. Other than inventory, you can probably buy everything used.

-the business is ideally run by a family. Just one person, and you can't do all the hours by yourself. Put in employees and there goes your profit (plus theft - not necessarily from the employees but because they just don't care as much as you).
I had the same thoughts as you but if these businesses are really making that kind of net income putting in those long hours, spending 25k year on wages for an employee or two still leaves me with somewhere in the area of 75k net, in a 50 hour week, which would I would be ok with.

Thanks for the thoughts
Sr. Member
Apr 2, 2009
851 posts
232 upvotes
sirex wrote: lotto sales don't really make you any money. they are just a value add - when someone comes to buy a lotto ticket they might buy a drink or a chocolate bar.
That would seem to contradict what these businesses are saying, all 4 of them have lotto commissions with the lowest being 30k and the highest being 45k/year. Since the lotto is government run, this is easily verifiable. why would they lie about something that can be verified so easily?

having said that, I know little about how the commissions work
Sr. Member
Jul 10, 2005
763 posts
123 upvotes
Toronto
colossk wrote: I had the same thoughts as you but if these businesses are really making that kind of net income putting in those long hours, spending 25k year on wages for an employee or two still leaves me with somewhere in the area of 75k net, in a 50 hour week, which would I would be ok with.
I think you are underestimating your expenses and time. You need to manage suppliers, check inventory, place orders, attend payables, payroll, and so much more.

Don't expect much help with 25k of manpower per year.

You will work a lot more than 50 hrs, for a lot less than 75k.
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May 9, 2006
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dani_toronto wrote: I think you are underestimating your expenses and time. You need to manage suppliers, check inventory, place orders, attend payables, payroll, and so much more.

Don't expect much help with 25k of manpower per year.

You will work a lot more than 50 hrs, for a lot less than 75k.
+1

My parents had multiple convenience stores as I grew up. It a lot of work and long hours which is tough on the family. Convenience stores are a very tough business now. Gas stations, grocery stores, drug stores have eaten a lot of their client base. Less and less people are smoking. Less people buy newspapers and magazines. You have to deal with crime, but mostly it's petty theft from kids.

The profit may seem high, but its a 2 person operation. While one person mans the store, the other buys inventory, cleans, restocks, paper work, etc. You have to be careful about waste as it can destroy your profits. Also you need to be an expert RFDer. Many times sales of pop at grocery stores are cheaper than wholesale costs.
Sr. Member
Apr 2, 2009
851 posts
232 upvotes
dani_toronto wrote:
Don't expect much help with 25k of manpower per year.
I was wondering why you think that? That's about 150 hours worth of labor per month at min wage. And that includes the extra employers portion of the remitance.
Sr. Member
Apr 2, 2009
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joeyjoejoe wrote:
The profit may seem high, but its a 2 person operation. While one person mans the store, the other buys inventory, cleans, restocks, paper work, etc. You have to be careful about waste as it can destroy your profits. Also you need to be an expert RFDer. Many times sales of pop at grocery stores are cheaper than wholesale costs.
Thanks for the input. From what I have understood, things like pop/chips sales have the highest margins but are just a minor part of the profitability of the store. About 75% of the profit from variety stores comes from lotto commissions and cigarette sales. (Which is the exact opposite of what I would have initially thought) Getting a store with an imperial contract is extremely important from what I have understood

Would this be an accurate statement?
Deal Expert
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Nov 15, 2004
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Cigarette laws will wreck you. My ex's family had a store and the constantly changing laws had them putting out money on new displays and such several years in a row. The demand is also dropping, but people are all too willing to rob your store for them.

New laws governing what big box stores can do (Walmart/Loblaws/etc can now stay open 24 hours a day if they'd like) and increased competition from established convenience chains (Hasty Market in particular) also kill the business of many convenience stores and the families that own them.
Sr. Member
Jul 10, 2005
763 posts
123 upvotes
Toronto
colossk wrote: I was wondering why you think that? That's about 150 hours worth of labor per month at min wage. And that includes the extra employers portion of the remitance.
Assuming you are open 7 days a week, that gives you 5 hours of min wage help per day. And that gives your worker an incredibly boring part-time min wage position with 0 growth potential. Unless he lives in his parents basement he'll spend half of his take-home pay in rent.

Will you give this guy access to your cash register?
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Nov 9, 2003
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Grimsby
Back in the days when supermarkets close at 6 on Saturdays till Monday I installed and maintained equipment for a jug milk chain and other small retailers.

Yes the majority were operated by immigrants because Canadians seemed not to have the work ethic required to succeed. Most/many small stores had a mattress in the back room or basement and primitive cooking facilities. As noted above the cheapest place for them to buy brand name pop was the supermarket sadly.

I Googled 'operating a variety store' and got over 4 million hits. I Googled 'problems operating a variety store' got over 50 million hits, interesting.
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Dec 10, 2004
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Canada
I lived around a bunch of stores that I personally never knew how they were making money as they barely had any visitors.
Upper class and yonge people don't buy as many lottery tickets nor do they smoke as much. If these are the top sellers you need a good targeted locations. Poorer areas with low middle class or lower would be better choices for a convenience store.
I'd be cautious if I saw a business making 100K being sold for $200K as that doesn't make any sense. Not unless that store is open 24 hours and manned by 2 people.

Personally, I think convenient stores can make more money by selling cool gadgets off Ebay or sites such as DX.com

I knew of only 1 smart convenience store owner who was making A TON of money off his store.
1. He worked with his wife
2. They had another 2 workers working for them
3. Store was selling cooked food which locals liked
4. Great location
5. They had fax,copy/scan services available
6. It was a good sized store with a lot of choices to buy.
7. For a fee they were delivering around neighborhood, allowing elder people to shop at them and load up with products.
8. Owners were super nice to everyone so it was a pleasure to spend money there even though prices weren't the lowest
Jr. Member
May 17, 2012
129 posts
12 upvotes
Toronto, Canada
I have several friends that own convenience stores and I'll give you very valuable advice I got from them at one point.

1) To really make money, you have to be able to invest your your own time as labour.

2) You need to know your demographic. For instance:
i) One of them operates in a Middle Eastern neighbourhood and sells stuff as hookah flavor, sheesha pens and pipes, middle eastern incense, 'zaa'tar', some edible sweets, and 3M car care because 3M is one of the trusted brands in that region of the world.
ii) Another is in a Carribbean neighbourhood and he sells beef pattys. du-rags and hats, hair weaves, sticker car decals, Digicell prepaid gift cards, and DJ mixtapes, and a national and international faxing services.
iii) 3rd is a in Phillipino neighbourhood and sells Filipino bread, MANY coconut related products (creams, oils, food powder and more), some sort of Money Transfer service to Phillipines.

3) Be diligent at paperwork and invoices. It's going to be common for your goods to come straight from Wal-Mart or Target or No Frills.

4) Relationship with your vendors for the impulse buy items which are stacked the counter. Magazines / junk food / gum / sunglasses. Some will operate on credit, some won't. Some will have a minimum purchase dedicated every week so it is worthwhile to have their delivery guy come and unload and have you sign off so they can auto-deduct your bank account.

5) Change items according to the season. Fans, shovels, salt, fruit and grass seeds ... basically don't get a 'convenience' store .. get a 'variety' store.


Good luck.
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May 9, 2006
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dazz wrote: I lived around a bunch of stores that I personally never knew how they were making money as they barely had any visitors.
Upper class and yonge people don't buy as many lottery tickets nor do they smoke as much. If these are the top sellers you need a good targeted locations. Poorer areas with low middle class or lower would be better choices for a convenience store.
I'd be cautious if I saw a business making 100K being sold for $200K as that doesn't make any sense. Not unless that store is open 24 hours and manned by 2 people.

Personally, I think convenient stores can make more money by selling cool gadgets off Ebay or sites such as DX.com

I knew of only 1 smart convenience store owner who was making A TON of money off his store.
1. He worked with his wife
2. They had another 2 workers working for them
3. Store was selling cooked food which locals liked
4. Great location
5. They had fax,copy/scan services available
6. It was a good sized store with a lot of choices to buy.
7. For a fee they were delivering around neighborhood, allowing elder people to shop at them and load up with products.
8. Owners were super nice to everyone so it was a pleasure to spend money there even though prices weren't the lowest
ezconnect wrote: I have several friends that own convenience stores and I'll give you very valuable advice I got from them at one point.

1) To really make money, you have to be able to invest your your own time as labour.

2) You need to know your demographic. For instance:
i) One of them operates in a Middle Eastern neighbourhood and sells stuff as hookah flavor, sheesha pens and pipes, middle eastern incense, 'zaa'tar', some edible sweets, and 3M car care because 3M is one of the trusted brands in that region of the world.
ii) Another is in a Carribbean neighbourhood and he sells beef pattys. du-rags and hats, hair weaves, sticker car decals, Digicell prepaid gift cards, and DJ mixtapes, and a national and international faxing services.
iii) 3rd is a in Phillipino neighbourhood and sells Filipino bread, MANY coconut related products (creams, oils, food powder and more), some sort of Money Transfer service to Phillipines.

3) Be diligent at paperwork and invoices. It's going to be common for your goods to come straight from Wal-Mart or Target or No Frills.

4) Relationship with your vendors for the impulse buy items which are stacked the counter. Magazines / junk food / gum / sunglasses. Some will operate on credit, some won't. Some will have a minimum purchase dedicated every week so it is worthwhile to have their delivery guy come and unload and have you sign off so they can auto-deduct your bank account.

5) Change items according to the season. Fans, shovels, salt, fruit and grass seeds ... basically don't get a 'convenience' store .. get a 'variety' store.


Good luck.
These are actually good advice. When my parents had a convenience store, we sold flowers, gifts (toys), stationary (for the high school and grade school near by). That was the need 20-30 years ago. Now I see convenience stores sell LD cards, cell minutes, gadgets, takeout food, photocopy, passport photos, and even dry cleaning.
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Nov 15, 2005
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Be cautious of the stated sales, I knew someone that owned a variety store and when it came time to sell, they had their friends and family pretend to be customers in order to inflate the sales. They knew when the prospective owners would be there and asked friend and others to just drop by and purchase a couple of things.

It might seem easy but it's a long and boring business. You will be constantly searching the sales and shuttling between various locations to purchase stock. If you work there, for 8+ hours a day alone, think about how you'll kill the time.

If you hire people, you also have to worry about if they will steal from you.
Deal Addict
Aug 28, 2007
2167 posts
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Calgary
I don't think it is an issue of overstated earnings. I think it is a basic issue of long hours. Do the math; the store will need to be open 7 days a weeks - somewhere near 15 hours a day. That's over 100 hours a week - meaning 5,200+ hours a year. Even with claimed net earnings of $100K ish... that means you'd be working for around $20/hr. Paying a minimum wage employee so you could take a day off would take over half of that. ... and you are still responsible for 100% of the business risk.

I think that also explains why immigrant families are dominant in that market. They are only ones willing to work that hard so they can put their kids through school in Canada. They sacrifice themselves so their next generation can get a better life. Noble and immigrants have been doing it for centuries.

But I don't think it is an "easy-street" business model, in OP's case.
Member
Jan 17, 2014
311 posts
40 upvotes
Woodbridge
There are other options for opening a business in the $200K range then a corner store IMO.
But it depends on what town you live in. If you don't mind the long hours for $75K a year, then go for it. But figure on working 10 hours a day, 7 days a week. That's $20/hr which isn't bad.

There are franchises out there that are new and can also generate that kind of money without the huge hours. Try this one, Quesada, I see these popping up everywhere.
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