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Growth and Opportunity with Convenience Stores

Growth and Opportunity with Convenience Stores

Convenience Store Outlook

The convenience store industry has withstood fierce competition over the last few years for those looking for convenience and accessibility, and a variety of fresh and healthy products.

Industry revenue is anticipated to grow due to efficiencies in technology, higher income levels, and increase in foot traffic in populated areas. Predicted growth shows the industry rising at an annualized rate of 1.1% to $39B by 2027.

Major Products & Services

Industry operators have increasingly shifted product mixes to include food service products that are more profitable than items such as cigarettes and have focused more on satisfying demand for quick and easy meal options. As a result, industry operators have benefited from consumers’ need for time-efficient and healthy food service locations. The industry’s major products and services are:

  • Tobacco products
  • Food service
  • Packaged beverages
  • Candy and snacks
  • Beer
  • Other

Convenience Store Key External Factors

The industry has grown in popularity over the last 5 years as employment rates have increased. In response to Americans’ growing demand for convenience, industry operators have opened additional stores, expanded into new markets and readily adapted to changing consumer tastes to increase sales. It’s always important to research your market and keep an eye on some of the industries key external factors:

  1. Healthy Eating Index: Expected to continue to rise as consumers demand a variety of premium and organic products which increases industry revenue.
  2. Percentage of Smokers: While the percentage of smokers is expected to decrease, smokeless tobacco use increases leaving an opportunity in the market.
  3. Urban Population: Anticipated to increase, the urban population tends to purchase more frequently, lifting industry revenue.
  4. Per Capita Disposable Income: Convenience stores typically charge higher prices for non-essential items in return for accessibility. Per capita disposable income will directly affect the industry.

Owner-Operator Steps to Success

Opening a convenience store, as compared to other commercial properties, allows for freedom to determine profit margin, a natural customer segment, economic stability, and relative ease in getting starting requirements completed. However, opening a convenience store involves more than just registering it with the state. Here’s some tips on how to get started.

  1. Create A Comprehensive Business Plan
    This includes researching the costs involved, such as rent or mortgage payments, equipment and inventory costs, and staffing expenses. It is also important to consider ongoing expenses, like utilities, marketing, and insurance. Additionally, you should consider the location when looking for commercial property. Be it a rural neighborhood, a rural transient area, an urban neighborhood, or an urban transient area. You should take your target market into consideration and how you can cater to their needs and preferences. Furthermore, it is crucial to think about pricing strategies and ways to increase profitability.
  2. Establish A Legal Entity
    This can be a sole proprietorship, partnership, limited liability company (LLC), or corporation. Setting up a legal entity provides protection against personal liability in case your convenience store is sued. You can form an LLC on your own and only pay minimal state LLC costs, or you can hire one of the best LLC services for a small additional fee.
  3. Register For Taxes
    Before you can establish your convenience store, you must register for state and federal taxes. This includes completing an EIN application on the IRS website. The EIN, Employee Identification Number, is assigned by the IRS used to identify your business and your tax account.
  4. Open A Dedicated Business Bank Account And Business Credit Card
    This is essential for personal asset protection. It is also crucial to set up business accounting and keep accurate and detailed records of all expenses and income. This will help you understand the financial performance of your business and simplify your annual tax filing.
  5. Obtain The Necessary Permits And Licenses
    You risk paying expensive penalties or possibly having your store shut down if you don’t obtain the required licenses and permits. This includes a tobacco vendor’s license, which must be renewed annually, a liquor license, and a lottery retailer’s license. You could also acquire a resale certificate, which enables businesses to buy products with the intention of reselling them, without having to pay sales tax. If you sell food, you will need licensing from a local health department. It is also essential to acquire music licensing and a certificate of occupancy.
  6. Get Business Insurance
    Business insurance is crucial to protect your business in case of a loss. There are several types of insurance policies created for different types of businesses that face different risks. If you are uncertain about the types of risks that your business may encounter, begin with general liability insurance. Since small businesses typically require this kind of coverage, it’s an ideal place to start.


Starting a convenience store as a commercial real estate investment operator can be a consuming task, but with proper planning and execution, it can be a profitable and successful venture. There are also many options and opportunities to invest in a convenience store without getting your hands dirty. Sands Investment Group has a specialized team built across the country with expertise in convenience store commercial real estate investments. Check out our c-store team, convenience store listings, and learn more by reaching out to a SIG team members today.

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