How to Open a Convenience Store: The Ultimate Guide

If you’re dreaming of opening a convenience store (c-store), it’s an opportune time to do so. Like any other business, opening a c-store requires significant preparation, business know-how, marketing savvy, and financial readiness to become successful. 

Given modern technology and automation tools, you can set your business up for success well ahead of your grand opening. Let's look closer at the foundational elements of a successful c-store launch.

Opening a Convenience Store 

The US convenience store market is expected to grow at a compound annual growth rate (CAGR) of 6.12% from 2024 through 2029, offering a great chance at recurring revenue in a stable and increasingly consumer-friendly market (Mordor Intelligence). While the need for accessing food, drinks, and lifestyle items in a convenient fashion won’t go away, thousands of other business owners think the same way. You need a strong operational, sales, and marketing plan to keep customers coming in the door and ordering online. 

Crafting a Business Plan: Key Components for Convenience Store Success  

Writing a business plan is one of the first things to do (perhaps even before choosing a name for your store or brand). A strong business plan includes everything from your target demographics, products to sell, and sales channels to your brand differentiation strategy, purchase incentives, and seasonal marketing campaigns, plus many other components. 

In the US, there are over 150,000 c-stores—most of which operate at around a 5% in-store item profit margin—so providing strong reasons for customers to choose your business over the thousands of others is critical. Sound business strategy and operational excellence are two driving characteristics that will attract new customers upon launch and retain them after your launch week. 

Ask yourself the following questions when drafting your business plan: 

• What demographic(s) do I target and is this any different from the average c-store? 
• What kinds of memorable and useful outside-of-store, in-store, and customer service experiences will my brand provide? 
• Which offerings does my store have (e.g. convenient online ordering, enticing loyalty program, automated 24/7 customer service) that other stores don’t have, or don’t do as well? 
• What products will I offer and at what price points? How will I ensure competitive pricing, unique products, or both? 
• How will I provide a consistent, professional, and clean experience both in store and online such that customers return frequently? 

Determining your answers to these questions clarifies both the gap you’ll address in the market and how you’ll sustain sales volume. The nature of retail business is such that providing a rare, hospitable experience can be enough to spark word-of-mouth (WOM) referrals early on and encourage more people to check out your store.

Location Selection: 8 Factors to Consider for More Visibility and Traffic 

You may have heard the old saying: “Location, location, location!” This is an age-old phrase in the world of retail and hospitality about the crucial nature of choosing a location with lots of vehicle and foot traffic.  

This phrase is more than a trite observation, because you can grow your profit margin anywhere from 20 to 100% within just a few months’ time by opening your c-store in a high-traffic area. Here are eight questions to guide you towards choosing an effective c-store location:  

1. Do the area’s zoning laws allow or prohibit c-stores? 
2. How busy is the area on a normal Monday through Friday (no holidays, parades, events, etc.)?  
3. How many competing c-stores are nearby (i.e. within a two- to five-mile radius)?  
4. Is the area’s population increasing or decreasing year-over-year? 
5. Is this building/commercial space large enough for my c-store and my goals? 
6. Am I and my employees willing to drive to this location daily? 
7. What is parking like and is it sufficient for my customers and goals? 
8. Are there any other obvious or difficult challenges in operating a c-store here?

These are specific considerations that deserve your full attention, so don’t rush through them. Think wisely about the impact you want your c-store to be making three, five, 10, and 20 years from now—not just what business will look like a few weeks to months after opening.  

Financial Planning: Creating a Model and Conducting Research 

Planning your c-store's financial details from the beginning is a key part of getting it off the ground. It's even more important in a retail niche where the slightest adjustments can accelerate profits or deflate them.  

A c-store is much like any other retail business in that you stock inventory, sell products at competitive prices, offer periodic discounts, and incentivize customers to buy more frequently. C-stores are different in that people go to them for, well—convenience—picking up snacks, beverages, incidentals, and vehicle amenities. 

Building a useful financial model into your business plan is wise so you know what to expect before your opening day. Ask yourself the following questions when putting your financial details together: 

• How much revenue do I need to make to break even by a certain date? 
• How much revenue is necessary to pay all fixed expenses? What about variable expenses? 
• How much can I afford to pay employees, and at which salary or hourly rates? 
• What expenses can I reduce to keep costs as low as possible? 
• What does my loyalty program consist of and how soon can we expect it to become profitable? 
• What will my monthly or annual take-home pay be? 

Your financial model itself should be given thoughtful consideration, as well. Here are some important expenses and revenue channels to include: 

Expenses: 

• Rent and utilities 
• Staff and contractors 
• Point-of-sale (POS) and financial operations expenses 
• Computers, technology, and software costs 
• Commercial insurance 
• Worker's comp 
• Payroll taxes 
• Inventory and safety stock 
• Security 

Revenue: 

• Food and drink sales 
• In-store product sales 
• Gasoline sales (roughly four in five c-stores sell gas) 

Benchmark your financial model against other current c-store operations and review your revenue and expense categories thoroughly to ensure as much accuracy as possible. As an industry saying goes, “All models are wrong, but some are useful.” The idea is not to achieve perfection with your model but to work off realistic cost and sales inputs so you can achieve profit in as short a timeframe as possible.  

What Licenses Do I Need to Open a Convenience Store? 

It should come as no surprise there’s a lot of government paperwork and licensing required to open a convenience store. Most c-stores must complete and be able to reproduce, at a minimum:  

• Articles of incorporation or company formation documents 
• Employer identification number (EIN) 
• Business license or business operation license 
• Alcohol and tobacco license (if you’ll be selling these products—roughly 93% of US c-stores do) 
• Doing business as (DBA) license (if you’re running your business under a different name) 

While an EIN is free, the fees associated with the above-listed documentation vary by state and county. Review your state’s required documentation to legally operate your business and start completing those documents as early as possible. Government paperwork often takes time to process and can delay your opening day goals if you don’t provide your team and operations sufficient lead time. 

Details can change when it comes to government business paperwork—and often do without notice. Always perform your own due diligence even during the consideration stages of starting a business and consult a lawyer or specialist based on your area(s) of need. 

Updates to the US 2021 Corporate Transparency Act also require business owners to file a Beneficial Ownership Information report with the Financial Crimes Enforcement Network (FinCEN) before January 1, 2025. Speak with your attorney or a relevant professional about legal matters to ensure you’re compliant. 

What Permits Do I Need to Open a Convenience Store? 

In many cases, US state governments require the following permits to lawfully operate a convenience store: 

• Occupation permit 
• Health permit 
• Gas permit (if you’ll be selling gasoline) 
• Lottery ticket permit (if you’ll be selling lottery tickets) 

Double-check all the requirements in your locale to ensure you’re completing the relevant paperwork and in the due timeframe. Review details with a lawyer or other licensed professional if you have questions. 

C-Store Design, Merchandising, and Layout 

Your store’s physical design elements—like front-of-store signage and lighting—as well as the floor plan, like how far apart shelves and promo bins are, directly impact your guests’ impressions of the store and their purchasing behavior. Providing enough space for guests to get around the store and find what they need is just as important as maximizing your space to maintain low costs. 

What’s more, you may notice that c-store floor plans are highly like those of grocery stores. There are multiple reasons for arranging shelves, freezers, and refrigeration walls in a way to facilitate the maximum likelihood of larger purchases from every buyer.  

Check out the following c-store layout and merchandising best practices to maximize revenue from day one: 

• Place drink refrigerators and coolers far away from the entrance. Customers often drop into a c-store to grab a cool drink on a hot day or treat themselves to something nice. Putting these items in the back requires people to walk through most of your store and at least one to two aisles—thereby seeing more products—before they find what they need. 
• Consider displaying high-traffic or high-value items to the right. People tend to turn to the right when walking into a building or location, so putting important items in that direction increases the odds they’ll pick one up.  

• Customize your colors and material choices. Shelving, door, window frame, and lighting decisions may not seem like they have impact, but in a world where people can buy almost anything online, they’ll go to physical spaces for the experience it provides. Think about the visual experience you want your customers to have and how your physical store components facilitate that, and how you can bring this to life. 
• Consider diagonally placed shelves. This may sound odd at first glance, but a diagonal shelving layout instead of a grid-based one is an effective theft deterrent. While the percentage of crime that occurs in convenience stores is low overall, shoplifters are only caught about 2% of the time (RecFaces). Being able to view guests’ movement patterns while they shop decreases the likelihood they’ll help themselves to the ol’ five-finger discount. 

Conversely, here are the outcomes your c-store should never create for customers: 

• Leaving too much open space. Your floor plan should make reasonable use of the open spaces in your c-store, including between shelves and the checkout counter and aisles and the restroom. This is a suitable place to set up bins full of new or seasonal items, like sunglasses, mist fans, gloves, and children’s toys (purely as examples). Customers can easily spot your latest offerings and it’s low-hanging fruit for driving more revenue.  
• Making aisles too cramped. On the flipside, not having enough space in your store is just as annoying and also dangerous. In the event of a fire or emergency, you don’t want anyone in the store to have difficulty getting out quickly and safely. Walk through your store on a regular basis and make sure there are no tight corners or precariously hung shelves. Make any adjustments needed right away so your guests feel at ease and welcome during every visit.  
• Difficulty getting into or out of the bathroom. It’s no secret that millions of consumers stop at convenience stores every day to use the restroom. If your bathroom is out of soap or toilet paper, the lock doesn’t work, the mirror’s cracked, or a lightbulb needs to be replaced, do it right away. A comfortable, clean experience should be the bare minimum.  

Review your plans for the above with your strategic partners and senior staff if you’ve already brought them aboard. Commit deep thought to the experience you want your customers to have primarily, and secondly how you can combine that with profitable growth mechanisms for your business.