How to Open a Grocery Shop — Ultimate guide

8 min readApr 9, 2021

Main costs of opening a Grocery Shop

There are two main types of costs when considering how much it costs to open a grocery shop.

On one hand are the startup costs that include all the funds you will need to rent or buy a place, to get the necessary licensing and settle the business.
On the other, there are the ongoing cost that comprehend the monthly and annual payments to the landlord, taxes and other recurrent payments such as staff wages and insurance fees.

Choose a location for your Grocery shop

The first step to determine your location is the average cost of the square metre or foot in the area.

So choosing the area where your grocery shop will be opened it is not as much about the neighbourhood and their social status, but more about how much a square metre of your shop will cost you on a daily basis.

Of course, the price per square metre depends on the type of neighbourhood and surrounding areas, your potential clients demographic profile and consumption pattern.

You will also will have to consider the proximity of other grocery shops or bigger market players such as major grocery stores or even a shopping mall.

Sometimes, instead of trying to avoid competence you can obtain more benefits for your average income if you join forces with them.

Mistakenly many grocery business holders think that the bigger is the grocery shop the better or the smaller it is, the more you save on the rent is not always true. Because they are many more factors that define how much money will it cost you to run a grocery shop in a particular location.

In any way, you always have three choices about your place: you can rent an existing store and save money on initial investment, you can buy it or build it yourself.

The two last option will considerably affect on how much will it take you to start your grocery business.

Getting a licence and insurance for a grocery shop

Food business has one of the most complex licencing processes due to the nature of the products and direct implication to the human health.

Besides every state or country has specific regional regulations that have to be observed if you are aiming at running a successful grocery store.

You also have to keep in mind that there are specific products such as alcohol that might need a special licence or permit, which can be a long and costly process.

You might also need to get other special control permits and be subjected to various inspections from the country health and fire departments, even before you start up your business.

All in all, you will surely need to acquire the next permits:

Business Identification Number
Business licences
Insurance agreement
Health department permits
Specific products licencing

As for the insurance and how much it is to get an annual coverage for a grocery store it depends on some specific terms, but in general a grocery shop owner will get a common liability coverage, which includes general protection against a lawsuit, robbery and damages.

Consumable goods insurance is quite extensive because it is aimed at neutralizing all possible claims and misunderstanding that may arise when working with a broad amount of people.

In this respect, the cost of your insurance will be directly reflected on the coverage, but most of the time it is worth it as it includes liability, property, crime and business income coverage.

In any case, it is highly advisable to schedule a couple of consultations with the nearest insurance broker and find out how much you will spend on you grocery shop insurance.

Purchasing equipment and stocking your shop

The first step to set up your grocery shop is to equip it with shelves, POS and payment processing devices, baskets, freezers, storage shelving, security cameras and screens among other supplies needed for product display and storage.

It is advisable if you find a provider that will be able to offer the most part of the supplies and equipment, so you can cut your expenses by getting a better price.

The other option is to rent large pieces of equipment or buy it second hand from a specialized dealer or a store that has been recently closed.

In this case, you will have to know exactly how much does grocery shop equipment cost in order to seal a better deal.

The only inconvenience here is that you are investing your money at your own risk, because you will not probably have any guarantee if any of this equipment results being faulty or stops working in a short period of time.

In general, having well-functioning equipment can save the day and finally lessen the cost of running a convenience shop, because the cost of repairment of damaged or non- functional pieces can overcast the price of buying a new one.

It is also smart to negotiate or have a close look at the maintenance policy of your future equipment provider for possible pitfalls or hidden clauses.

Marketing your grocery shop

In order to define how much it will cost to run a grocery shop, you will also need to know how much you will spend on publicity and advertising. Any respectable marketeer will tell you to start your marketing plan with your target audience research, and it is true.

Marketing analysis for a grocery shop can be tricky and complex, because it has to take into account as many demographic factors of the potential buyers as it is possible due to the broad choice of products and services that are offered in the store.

First step is to define your services as a grocery store, whether you have bakery, butchery, special delivery and other distinguishable services that can set you apart from the neighbouring competitors or big convenience shops.

Then you will have to ponder out how much it costs to implement these specific services in your convenience store.

Sometimes an idea might seem plausible until you execute it in real life and evaluate how it affects the a verage cost of running your business.

Anyway, it is always a good idea for your grocery shop marketing plan to have something that will distinguish you from the rest.

Maybe it is your location, which you can highlight in your advertisements, maybe it is the type of products or customer services such as large parking spaces, free coffee machine and so on.

All counts when it comes to opening up a new grocery shop business, just keep in mind to be open to several possibilities and keep on trying new ones. You never know what your potential clients might like or what can cause them to turn away from your shop.

Hiring staff for a Grocery shop

Once you have chosen your business model and found a location for your convenience store.

It is a high time to think about hiring help, because for consumable goods business staff is one of the key elements that will influence how much money your shop will make a day.

Their skills, their professional approach, their willingness to improve their work and hence the shop service will have a direct impact on how your potential clients will see your shop and if they will come back.

If your grocery shop is a sole proprietorship, and you only need a couple of employees to support you on daily tasks at the cashier machine or for shop management assistance.

Even so you will have to keep track of their performance in order to know how much does it cost you to run a grocery shop with these particular employees.

If your business is a large store with several departments, posting a job offer online might seem as a good idea, unless it does not cost you over $100 a month.

To cut off the average cost of the hiring process you can also try to reach people through your social media account or just offer a fill-in brochure at the store for those who would be interested to work there.

And remember, it is essential not only to find the appropriate staff member, but also to give them the retribution they deserve.

Of course, how much you pay each of your employees depends on their realm of responsibilities, because the salary of a department or store manager is not equal to that of a cashier, a bagger or custodial staff.

Nevertheless, if you try to keep average wage standards or even top it up a little, it might reflect positively on the cost of running your business in along term.

Some things you have to know to run grocery shop

All in all a grocery shop is one of the most stable business options nowadays.

They might be costly to start and get the first investment, but once you have established and started to get the first customers, unless you do not follow the basic marketing laws, it is difficult to fail.

What is necessary to observe after you have established your business is how you can efficiently register your income flow and expenditures on the balance spreadsheets.

If you have never been in touch with accountancy and have no idea how to appropriately reflect financial data for taxing, you should definitely hire a specialist.