Thinking about buying a convenience store? You’re not alone. With the UK convenience store sector generating revenues of £55.9bn annually, many entrepreneurs are eyeing this robust market. But is buying an existing store the right move for you?
Perks of buying an existing convenience store
A time-tested business model
“But isn’t a convenience store the simplest business out there?” you might ask. Not quite.
Anyone starting a convenience store from scratch will need to think about their fresh versus non-fresh offering, their value-added services (think parcel collection/drop-off, etc.), their store layout, their alignment or non-alignment with a symbol group, their fascia, their local competition… and the list goes on.
When buying an existing convenience store, all the leg-work has been done for you, meaning that you can kick back and sip some mojitos… Well, not quite, but you get the picture.
Existing infrastructure and market knowledge
Equipped premises, established supplier relationships, and trained staff will already be in place, saving time and money on initial setup costs.
EPOS systems, for example, can require investment upwards of £1,000, and self-checkout machines can require investments upwards of £15,000 (gulp). Commercial refrigeration units also come with eye-watering price tags – from £800 to upwards of £4,000.
If you’re planning on buying a symbol or franchise store (think Nisa, Spar, Bargain Booze, Londis, and Costcutter), you’ll also benefit from an established brand, buying power, investment, merchandise, access to trade advertising and staff training programmes.
With an existing store, you’ll also likely benefit from the previous owner’s knowledge – this might be an awareness of local market risks (all those pesky Express supermarkets cropping up everywhere), high-performing high-margin products, shrinkage rates, or the times of highest footfall.
A built-in customer base
Existing stores come with a ready-made customer base, reducing the need to raise awareness of your store in the local area.
“But consumers aren’t loyal to convenience stores!” you protest.
The numbers tell a different story: according to Lumina Intelligence CTP 2024, customers visit their local convenience store 2.7 times per week on average and 30% know those working and running their local shop quite well or very well. This built-in loyalty and footfall will provide new owners with a steady stream of revenue from day one, allowing you to focus on enhancing the store’s profitability rather than attracting new customers.
A cash flow that will deliver on day dot
Buying an existing convenience store will likely start generating income from day one of ownership, and the P&L statements will also take the guesswork out of your expected weekly takings.
And with average weekly revenues of £32,692 and profits of £1,415, you can expect to pay yourself a respectable wage from the get-go.
Banks may also be more willing to lend for purchasing an existing business with proven performance and historical financial data than for an unproven model.
Some possible drawbacks
Possible needs for modernisation
Older stores might require significant investment to update technology and meet current market trends.
According to the ACS Local Shop Report 2024, convenience stores across mainland UK collectively invested £1 billion in their businesses over the past year—an average of nearly £20,000 per store. This suggests that savvy store owners recognise the need to reinvest in their operations to meet customer expectations and stay ahead in the market.
Investment in areas such as point-of-sale (POS) systems, new energy-efficient refrigeration units, and self-service checkouts may be needed before you can run the store how you want.
Due diligence risks
Buying a business comes with the risk of inheriting problems like outdated faulty equipment, poor reputation, legal issues, or “creative accounting” – that is, skilled manipulation of the books.
And creative accounting may well be more common in more cash-intensive businesses such as convenience stores, which may be liable to buy shadow stock off the books.
Due diligence is crucial but can be time-consuming and costly. To verify stated revenue, you may wish to park yourself in the c-store’s corner for a few days, and record footfall and average daily takings.
Less operational flexibility
If you’re planning on buying a symbol or franchise store, you’ll typically have less autonomy around operational or business decisions. Franchise stores are expected to operate against a specific set of standards and hit a certain level of compliance against these targets. You’ll also have franchise fees and, in some cases, ongoing membership costs.
Even if you’re not buying a symbol store, you may need to retain key staff members for continuity, which could limit hiring flexibility.
Changing an established store’s layout or concept may also alienate existing customers who value familiarity and routine in their shopping habits.
