Convenience stores are on nearly every corner in every neighborhood. Customers rely on them for a quick coffee before work, an easy on-the-go meal, or a late-night snack.
These businesses always seem to be busy — but are they actually profitable?
This blog will share everything you need to know about the profitability potential of convenience stores. We’ll explore the industry average, explain the factors determining convenience store profitability, and highlight five best practices to increase your new business’ chances of success.
Are Convenience Stores Profitable? Crunching the Numbers
Convenience stores typically have higher profit margins than other retail businesses because of lower operating costs. Most c-stores are on the smaller side, and they typically only staff one employee during open hours — which means cheaper rent and lower labor costs.
Since customers rely on your store for convenient drinks, snacks, and meals, they’re also willing to pay a premium price for your products, giving your profits another boost.
So, what do these numbers look like?
- In 2023, U.S. convenience store sales hit $860 billion, and experts expect this number to continue to grow.
- Individual convenience stores earn an average of $1.72 million in revenue annually, excluding fuel sales.
- C-stores have average profit margins of 5 to 10%, so a business that generates $1 million in revenue could earn up to $100,000 in profit.
While these industry averages can help you make informed decisions and set goals, you can’t rely on them to determine how much your unique business will make. Your store’s foot traffic, revenue, and profits will depend on several factors, like your location, competition, and even the mix of products on your shelves.
That’s why we’ve put together some of our best tips to give your convenience store the best chance of profitability.
1. Start With the Right Technology
Our number-one tip for new convenience store owners is to invest in a powerful point of sale (POS) solution. This tool makes nearly every aspect of running your business easier, helping you:
- Track inventory levels and simplify the restocking process, ensuring your customers’ favorite products are always on your shelves
- Ensure fast, accurate checkouts to boost satisfaction and help you serve more shoppers in less time
- Monitor your store’s sales performance and make informed decisions to increase your revenue and profits
- Attract and retain customers through marketing features like promotions and a built-in loyalty program
- Manage your employees with tools like scheduling, time tracking, and payroll
In short, the right POS system can help you achieve high profits and smoother operations — a win-win for you and your customers.
Related read: What's the Best Convenience Store POS Software? 3 Top Options
2. Stock the Right Products
Your convenience store’s product selection is a critical piece of the profitability puzzle.
While providing a wide range of products that appeal to your customers should be your top priority, keep in mind that different products have different profit margins. C-store staples like snacks and drinks should still take up space on your shelves, but you can achieve higher profits by focusing on products like:
- Health, hygiene, and beauty items
- Alcoholic beverages and tobacco
- CBD, delta-8, and kratom products
- Lottery tickets
- Ready-to-eat meals like sandwiches, wraps, and salads
Stocking these products makes your convenience store a one-stop shop for your customers while increasing your earnings.
Pro tip: Your POS system’s sales reports should inform your stocking strategy. Use this data to spot trends in your sales and tailor your product mix to your customers’ unique wants and needs.
3. Set the Right Prices
Your next step to convenience store profitability is to master the art of pricing.
Pricing requires a delicate balance. High prices will drive customers to your competitors in search of more affordable options, but low prices will limit your earning potential or even put you in the negative financially.
That’s why you should take a data-driven approach to setting prices in your convenience store.
The best way to do this is to use your POS system to track your cost of goods sold (COGS), manage your prices, and calculate your profit margins by item. Ensure your prices are high enough to outweigh your inventory costs, but equal to or lower than your nearby competitors’ prices.
4. Attract the Right Customers
Our final tip to increase your convenience store’s profitability is to take marketing seriously.
An effective marketing plan expands your reach, turns one-time shoppers into everyday customers, and increases the amount your customers spend during each visit to your store.
Let’s look at some must-try convenience store marketing techniques:
- Create a Google Business Profile and update it with your open hours, a description of your products, contact information, and photos of your store’s interior and exterior.
- Offer promotions like mix and match deals or bundle discounts to encourage customers to add more items to their baskets.
- Launch a loyalty program to encourage customers to rely on you for all their c-store needs.
Marketing your convenience store might sound intimidating, but a POS system that includes features like promotion management and a built-in customer loyalty program makes it a breeze.
Are Convenience Stores Profitable? It’s Up to You
So, are convenience stores profitable? They certainly can be — as long as you have the right strategies and tools.
C-Store POS is an all-in-one POS solution specifically designed to help convenience store owners like you save time, make more sales, and achieve higher profits.
Whether you’re opening a brand-new c-store or revamping your existing business, C-Store POS has everything you need to make more sales and achieve higher profits, including powerful inventory tracking, in-depth reporting and analytics, speedy checkout tools, built-in marketing features, and even high-risk payment processing to help you sell trending CBD, delta-8, and kratom products.
See where C-Store POS fits into your profitability plan by scheduling your personalized demo with one of our convenience industry experts today.
