Convenient store.

A few days ago my daughter had the need for a Red Bull, she had a final exam the next day and I went with her to a franchise convenient store around the corner, took a big can of red bull ( 16 oz I think ? ) and it was $ 4.58 ? I paid for it and upon exiting the store thought to myself, “this thing costs close to $ 5 ?” Let’s just say I had a “wtf” moment, lol.
But I also thought that store must’ve made some serious bucks ?
Started looking for some franchise stores for sale, not many around where I live and no price either but there is one in central California for $ 200,000.
Does it sound too steep or cheap ? My friend thinks that’s cheap, I think that’s kinda steep, but of course it depends on location and how much gross income they are getting, so many unknown factors.
What are the pros and cons of having a store like this in your opinion ? I can think of one con now on top of my head, in LA area it has to be burglary which can be scary.

That's pretty cheap and yes, these places make good money. In fact, they make almost nothing off the gas, it all comes from the items sold in the store. I looked at this a few years ago and the profit on fuel was only 2 cents per gallon.

There is a well known exhaust shop in town that is selling out for $200,000 which includes an all block 3 bay shop and equipment / inventory. I think anytime you can purchase an established business with proptery for $200,000, it is cheap.

The middle man makes all the money.....

I talked to a store owner (grocery) that my wife used to work for years ago. We got to talking about business. He told me he makes basically 7% off all the stuff on the shelves.

IMO, not a lot of money.

You should be asking that question before considering buying anything retail.
700 bucks off 10K of sales is chump change IMO. I'm not into writing big checks for inventory to take home a paycheck....

I have heard that in my small town, Wal-mart is making 1 million in sales around Christmas every week (and I don't doubt it).

Totally agree, a grocery store, bar, restaraunt....all bad ideas in my opinion. The exception would be the niche ones like the Quick Shops which carry a 300% markup on their goods. Locate one in a small town several miles away from the nearest gracery store and you will make a good profit....expecially in the winter when nobody wants to drive to the larger city just for bread or something. That is the situation in my little village, the nearest grocery store is 7 miles away and the local gas station / convenience store even sells pizza. They make a killing around here.

I doubt it if the 200 k includes property for that shop Bob but then again I could be wrong, it is in central California where you can still buy home for 150k+

I agreed James, I honestly think down here, that number should be closer to 30%, and the gross sales should be closer to 50 grand for a 24 hour store ( which might be a requirement for that franchise ? ).
Even then, that only nets 15 grand, that may not be enough to make substantial profit especially considering you would have to pay at least 2 full time workers at $ 10 / hour plus all of the taxes, workers comp, etc, that would come out to around $ 5000 / month. That’s before any other expenses, electricity, maintenance ( if any appliances broke down ), window cleaning ( I can’t call James for that ), insurance ( I would think that would be a pretty high rate, especially if it covers burglar coverage ? ), unless if the location is next to police station ?
Even then, I’ve cleaned a bank last month that’s located next to police station and I told the guy, this must be the safest bank ever and never got robbed judging from there is no bullet proof glasses in front of the tellers, he said a few years ago it was robbed I asked him did he / they got caught, he said no, they got away, it was quick in and out job.

Profit margins are critical for any business and ones that require buildings are probably the toughest ones to succeed at. Not only the overhead of it, but if the market shifts from your location, it isn't like you can just pick it up and move.

I still view things like car washes as the best bet for a business these days. No employee costs, self-operating, and good profit potential. As long as you have at least one automatic bay and the location is good, you should do very well with very little effort required on your part....weekly servicing only. Each owner that I have spoken to over the years claim 250k per year as a minimum....and they are shut down over the winter. An area without winter must do twice that.

Your car washes shut down?! Ours never do. Even when its in the negative, they still run.

Some things in retail I would own, if I had the money and the time:
1 A bar/night club. People drink and want to party, no matter how the economy is doing.
2 A rent to own type store. People keep these places in business because no one ever has money enough to buy things in cash. They'll pay 300 weekly payments for a little bit, end up paying 3X actual retail, and go back for more.
3 A payday loan shop. People are not very smart with money, and I see these places making money hand over fist, every week, on small loans.
4 A national brand coffee shop. Everyone buys coffee there, even if it's WAY overpriced.
5 A niche restaurant. Even when the economy is in the crapper, people STILL eat out often. Be it fast food, or an upscale restaurant. People will spend the money regardless.

If I had the cash and the time, I'd be up for ANY of the above businesses. Constant cash flow.

The bar really is the worst the business to own. The employees rob you blind on stock and keeping the liquor license is also a chore. They change owners frequently for a reason...don't buy one.

I had a chance to buy into a gourmet coffee shop back in about 1990. We didn't have any Starbucks or anything in this area back then and this lady was going to open up a shop with gourmet coffee and cheescake. The buy in was pretty cheap back then, but I told her that it would never work out as people in this area would never pay for fancy coffees like that. Farmers drink it black and complain about it costing 35 cents. Needless to say, I was wrong and she now has 12 stores and doing quite well. I still wouldn't want a store though as there seems to be a lot of competition now and location has to be perfect to work.

Restaurants seem to be pretty iffy these days as well. Just look at all those chains that have gone under in the last 2 years. Large franchises are suddenly going under like Applebee's and TGIF. They seemed to have their act together for decades yet they are failing because the new generation doesn't frequent franchises.

You did mention a niche operation and I think that would be the way to go if going the food route. Something simple like a hot dog shop, or a food truck that caters to certain markets could all do quite well and would be easy to manage. Heck there is a hod dog cart here in my area that pulls in $500 per day just over the lunch time crowd in the summer. This is a simple wheeled cart, nothing fancy, and yet he does well over a couple of hours.

I couldn't get involved in the payday loan business though, I am just too nice to be able to run such a vampire business. I have contemplated bail bondsman a few times, but I am getting to old for all that negativity.

Lots of options out there, but I don't have any money to persue any of them these days.

Freemind1 wrote:Some things in retail I would own, if I had the money and the time:
1 A bar/night club. People drink and want to party, no matter how the economy is doing.
2 A rent to own type store. People keep these places in business because no one ever has money enough to buy things in cash. They'll pay 300 weekly payments for a little bit, end up paying 3X actual retail, and go back for more.
3 A payday loan shop. People are not very smart with money, and I see these places making money hand over fist, every week, on small loans.
4 A national brand coffee shop. Everyone buys coffee there, even if it's WAY overpriced.
5 A niche restaurant. Even when the economy is in the crapper, people STILL eat out often. Be it fast food, or an upscale restaurant. People will spend the money regardless.

If I had the cash and the time, I'd be up for ANY of the above businesses. Constant cash flow.  

I agree with most in this list, I wouldn’t want to do payday loan shop because it’s too risky and similar reason Bob mentioned.
Restaurant, especially franchise fast food can bank if it’s in the right location, but it’s a LOT of work, I used to manage a couple of subway restaurants 18 years ago, back then the store I worked at made over $ 1000 just from lunch alone, they open at 10 am, didn’t serve breakfast at all, now with most of them serve breakfast, I wouldn’t be surprised if they are making over $ 2,000 / day gross, that’s $ 720,000 gross, you would have to manage it really bad if you can’t get a quarter million dollars net after all expenses.
I disagree with you Bob, I think bars / nightclub will make lots of $$, there are lots of things you can do to control inventory, security cameras works well, as soon as your math discovers too much expenses in alcohol purchases vs gross sales, that’s when you roll the tapes.
Great ideas guys, wife really wants to start some other business and I’m supportive as I can start feeling my body’s wear and tear doing carpet / upholstery cleaning.

If I had big money to buy a business it would be a well known successfully biz like McDonalds, firehouse subs etc. The systems are already in place and the odds of the biz failing drops

I agreed Mo,there is a tiny problem with that, McDonald’s is a little over a million dollars each store ( to start new ), not sure how much for the ones already established, I would assume it’s more expensive than that, I cleaned for a company ( their corporate office ) that has 9 McDonalds around LA, they have training room for new employees, it’s got some pretty cool wall decors.
You would have to be a super lousy businessman to fail that kind of franchise.

Sometimes they are not so great. Take a look at owning a sandwich shop like Jimmy John's. On their own website they quote the numbers as each store averaging a gross of just over a million and the net for the owner being just over 100k....that stinks.