It might seem like a straightforward venture, but every convenience store comes with its own set of opportunities and challenges. Probing into these well before you sign on the dotted line is crucial.
From understanding the store’s operational model, lease terms, and bottom line, here are the most pressing questions you should ask when buying a convenience store.
Operational considerations
What is the convenience store’s business model?
You might think all corner shops are cut from the same cloth, but there’s more variety than meets the eye:
Some might go big on impulse buys and “top-up” shopping, keeping the regular groceries to a minimum.
Others jazz things up with extras like lottery tickets, ATMs, fresh bakeries, or even parcel pickup spots.
Some focus on being the go-to for booze, smokes, and vapes.
Others carve out a niche with fresh produce, ready-to-eat meals, or local and organic goodies.
And let’s not forget about the backstage support. While some shops fly solo as unaffiliated independents, others team up with franchises or symbol groups. This can mean a boost in branding, staff training, supplier deals, and overall business know-how.
What are the store’s current opening hours?
You’ll want to ask the current owner what the peak times are for customer traffic. Let’s say you’re thinking of running the shop from 8 in the morning to 9 at night. Sounds reasonable, right? But what if the place is buzzing with customers at 7 AM when folks grab their morning RTD coffee?
If the store’s busiest times fall outside your planned operating hours, that’s a red flag. You could be missing out on the most profitable parts of the day.
What are the key customer demographics?
Determining the store’s customer demographics will be essential for understanding what kind of establishment you’ll be running.
Rural neighbourhoods are more likely to have an older, wealthier and retired population who value things like a personal service and local produce. Urban neighbourhoods, on the other hand, are more likely to cater to a younger, more diverse crowd. They’d likely appreciate quick grab-and-go items, ready meals, and late-night options.
What staff does the store operate with?
How many staff does the store employ, and on what basis (part-time, full-time, or a mix)?
And what is staff churn like? High turnover could indicate issues with management, pay, or working conditions, and could present a problem for you as the new owner.
Financials
The c-store’s financials will paint a good picture of its overall health, revealing details about profitability, primary expenses, and cash flow.
What does the bottom line look like?
It’s essential to look at the company’s bottom line. Relying solely on turnover figures may be misleading. For example, grocery sales might only yield a 1-3% margin, while tobacco products might generate a 6% margin.
For reference, the average profit margin for a UK convenience store was 4.3% in 2024.
What is the revenue breakdown by product and service?
It might also be worth investigating the revenue breakdown by product and service (if that data is available) to determine any strengths or weaknesses in the store’s operations.
For example, if tobacco products make up a sizeable portion of total sales, this could spell trouble further down the line given the government’s plans to prevent anyone born on or after 1 January 2009 from buying cigarettes.
Is there scope for growth?
Could minor adjustments unlock new income sources or boost current sales? Extending operating hours or introducing fresh products and services might significantly increase turnover.
Is the store currently catering to growing product segments, such as healthier food options and RTD drinks? And does the store currently offer mobile phone top-ups, lottery, bill payment services, cash machines, parcel collections and returns, local grocery delivery, or even prescription collections?
If parcel collection/delivery is something you’re considering introducing, there’ll be some homework to do first. Different courier companies have their own rules, so you’ll want to check those out. For example, to become an Evri ParcelShop, you’ll need to be within 0.5 miles of an existing ParcelShop and not operate as a food outlet (e.g. a café or butchers).
What will be included in the sale?
No one wants to shell out £60k on their c-store to find the pricey EPOS system and refrigeration units have disappeared, so ensure that you have a full asset list for what will be included in the sale.
Leases (yawn)
It may be the most uninspiring part of acquiring a business, but if you’re acquiring a leasehold business, you’ll need to be fully cognizant of the lease terms.
How much can I expect to be shelling out on rent? Are there any future rental increases planned?
You’ll want to ensure that rent costs are comparable with local market rates and that they’re affordable. For reference, rent expenses account for 5.9% of a convenience store’s total revenue on average.
And to avoid being blindsided by rental hikes, ask if there are any scheduled increases in the lease terms and how frequently they occur.
How long is the lease? Can either party terminate the lease early?
You’ll want to know exactly how long the lease runs for and when it will need to be renewed. Is it for 5 years? 10? More? A shorter lease might mean renegotiating sooner than you’d like, which could lead to unpredictable costs or even losing your location.
It’s also essential to know if there’s a clause allowing the landlord—or even you—to end the lease early.
Will I be liable for all/any property repairs?
Don’t get stuck footing the bill for a major repair you didn’t anticipate! Understand your responsibilities when it comes to property maintenance.
Competition
What competition will I face in the local area?
Ask the current owner who their competitors are and what kind of products and services they offer. No one wants to plough their hard-earned cash into a business purchase to find that a Tesco Express is setting up shop next door.
And ask how the store differentiates itself on the market, e.g. with accessibility and parking, fresh and local produce, limited edition products, a wide range of vape/tobacco products, etc.?
Are any multiples or small-format grocery stores planning to open their doors in the vicinity?
You’ll want to avoid moving into an area where a multiple (such as Morrisons Daily and Sainsbury’s Local) could easily move in and steal your customers, so ask the owner whether they’re aware of any multiples or small-format grocery stores planning to open their doors in the vicinity. You may also wish to assess the suitability of any vacant retail spaces for multiples in the locality.
Legalities
What licences does the convenience store operate with?
As the potential new owner, it’s important to know which licences you’ll need to operate the store. Does the store sell alcohol, and if so, does it have a premises licence? And what about lottery licences?
And what other licensable activities does the convenience store engage in, e.g. the sale of late night refreshments? This includes the sale of over-the-counter hot food and food-to-go (e.g. pies and pastries) and drinks between 11pm and 5am.
Has there been any negative press or litigation issues?
You might assume a convenience store is a pretty low-key business, but in recent months and years, quite a few c-stores have made headlines for being involved in the illegal trade of tobacco and vaping products.
Many convenience stores have even reported receiving daily requests for illicit tobacco and vape products, as well as offers to sell them in their stores.
You’ll want to comb through the news to ensure that your target c-store doesn’t feature amongst any of these disgraced retailers.
