How Much Does It Cost to Open a Supermarket? [Supermarket Startup Costs]

Supermarket Startup Costs

If you’re thinking about opening a supermarket, you’ll be in great company. With more and more independent grocers joining the big-box chains, the industry is evolving in exciting ways. And there’s still plenty of room for growth. Astoundingly, 76 counties across the country do not have a single grocery store, according to USDA data. 

As an essential business, the overall outlook for supermarkets is stable and looking bright. You’ve probably already seen the encouraging numbers: U.S. households spend nearly $10,000 a year on average for groceries and go shopping 1.6 times a week. Though profit margins are notoriously thin, sales in the supermarket industry have been steadily ticking up, and the average grocery store generated an incredible $623,188 in revenue per week in 2023.

For those looking to jump in, the burning question is: How much does it cost to open a supermarket? Untangling all the startup expenses will be your first step. There will be obvious costs — like utilities, rent, and wages — and some not-so-obvious ones, such as marketing and interior design, which tend to add up quickly.

 Expect a few bumps as you figure it all out. But hopefully, armed with our cost breakdown, you can rest a little easier knowing you’re prepared for any surprises.

 If you’ve dreamed about owning a supermarket, here’s some advice about how much it costs — and how to do it well.

How Much Does It Cost to Open a Supermarket

We’ll get to the truth of it: The startup costs will be some of the highest expenses you’ll ever have to face, and figuring it out will feel like a crash course in business finance.

 Expect to spend $100,000 to $1 million or more to open a supermarket. This includes the expenses for refrigerated equipment, inventory, licenses, and staff salaries. The location and size of your shop will have a huge impact on the price, as will your decision to rent or buy and the extent of any planned renovations. For instance, the price to open supermarkets in rural areas of Texas, Kansas, or Nebraska — three states with the lowest number of grocery stores — will surely cost much less than their urban counterparts. 

The most successful supermarkets are not the megastores of years past, bathed in florescent lighting with less-than-exciting produce. Many are taking a “gourmet” market approach, whether it’s offering locally sourced items or special services tailored to their regional populations. Supermarkets also set themselves apart by committing to personal service and involvement in community causes, such as helping local schools or donating food destined for landfills. 

Price Range: $100,000 - $1 million

Business Opening Cost by Square Foot 

The average big-box supermarket in the U.S. spans about 48,415 square feet, according to The Food Industry Association. However, supermarkets come in all shapes and sizes, with many small-format grocery stores ranging from 12,000 to 25,000 square feet. Perhaps more important is how you utilize those square feet. While no “correct” floor plan exists, supermarkets have a tried-and-true layout that consumers find pleasingly familiar.

The classic grid setup, with straight, tall shelving in the middle and open space at the entry, provides easy access to your store's various areas. Lighting and high-end display cases are popular design features now, and the cases are often flexible and movable to highlight seasonal or highly curated products. You’ll want to devote at least 1,000 square feet to backroom storage, complete with refrigerated cases and a loading dock to handle the daily deliveries. 

Price Range: $50 to $300 per square foot

Startup Costs to Expect 

When creating a lasting budget for your business, it’s important to differentiate between fixed and variable costs. A fixed expense is one that typically does not change from month to month, like rent. A variable expense goes up and down monthly, depending on your business's needs.

When starting out, do as much research as you can. You’ll want to plot out a long-distance course to know what to expect at every turn — and how you’ll pay for it.

Here are some of the most significant liquor store startup costs and expenses you can expect.

1. Utilities

Utilities such as gas, water, electricity, internet, and phones must be set up before you open your doors, and the costs can add up quickly. On average, expect to pay about $2.10 per square foot for commercial space in the U.S. Lighting and HVAC systems tend to be the biggest “energy hogs” for most small businesses. 

Price Range: Around $2 per square foot

2. Location

According to the USDA, consumers drive an average of four miles to shop at their favorite grocery stores. It sounds counterintuitive, but having a large, convenient parking lot is more important than a super central location. For most restaurants and small retailers, a walkable location in the city center is the gold standard, but for supermarkets, convenient parking and a sprawling space are key. With that in mind, you might be able to negotiate a deal.

Retail rents in U.S. shopping centers have reached an average of $23.98 per square foot, according to Statista. Western states have the highest rents in the country, averaging $29.01 per square foot. The Midwest runs $18.26, making it the most affordable region. Of course, rents can spiral into the stratosphere if you plan to open the country’s most expensive areas.

Before you pass out from sticker shock, remember that rent will be by far the most expensive upfront cost of opening a retail store, especially since you should have more than a month — ideally two years — in accessible capital.

3. Interior Design

You might be a financial stickler, negotiating the lowest rents and keeping your utilities in check. But when it comes to interior design, things can add up fast. Most interior designers charge for their services by the hour, ranging from $50 to $500 depending on their experience. On average, you can expect to pay $100 to $200 per hour.

Before you balk at hiring a supermarket designer, consider that a proper layout can easily control traffic flow and nudge customers to desired areas within the store, like displays of special products. In smaller supermarkets, an efficient layout is essential to capitalize on valuable shelf space. A designer can weigh in on optimizing traffic flow in the parking lot, too.

Price Range: $100 to $200 per hour

4. Finishes and Equipment

Even the smaller supermarkets require substantial equipment to keep everything fresh and in tip-top shape. You’ll need a freezer and refrigerated cases, sturdy shelving, bins and display tables, signage, lights, walk-in coolers, and shelving for the storage rooms — at a minimum. Also, factor in costs for specialized equipment for the butcher, the baker, and the cheesemaker. Think warmers, deli slicers, grinders, saws, knives, and cutting tools. But don’t fear; there are ways to save money, such as buying used equipment or leasing big-ticket items until you get your footing.

When it comes to décor, many supermarkets have incorporated personal design touches like reclaimed wood, natural light, and even hand-painted murals, á la Trader Joe’s. For instance, Erewhon, an upscale Los Angeles grocer, designed its Silver Lake location to approximate “the feel of a restaurant” with an exhibition kitchen, breezeways, millwork, and brick accents.

 Price Range: Renovating a retail store costs about $56 per square foot, but it largely depends on how swanky or bare-bones you want it to be.

5. Pre-Opening Expenses

The grand opening is an important opportunity to win over customers from competitors across town, so you’ll need everything in place the minute you unlock the doors. It is your moment of truth, so plan on stocking extra inventory and ensuring everything is as pristine as possible.

Your employees will be expected to know the location of every last pickle jar and tuna can in your store and quickly check them out using your POS system. You’ll want to invest in training your staff on all the essential technology long before the official launch.

6. Marketing and PR

Your brand identity is the cornerstone of your business and should be at the top of your to-do list. According to a recent Forbes article, a small business owner can expect to spend anywhere from $1,000 to $5,000 on startup branding. This includes everything from website design to logo creation and establishing a social media presence. All your future marketing and PR efforts will flow from your brand, so making an investment upfront is essential.

 After establishing your business, ongoing marketing and public relations efforts will typically cost 5 to 10 percent of annual revenue but can go higher during times of growth, like if you expand to a second location. Things to consider: You may want to build an app, hire social media managers or influencers, create customer loyalty programs with product giveaways, circulate coupons and discounts, and purchase an email marketing service, such as Constant Contact.

Of course, if you buy into a franchise, much of this will be taken care of for you. But keep in mind that supermarket franchise options are very limited as most of the biggest brands are corporations.

7. Capital and Loans

There’s nothing wrong with having big dreams of instant success, but just like any new business, you must ensure your supermarket is backed up by capital and contingency funding. 

The average supermarket's total operational costs tend to be between $1,570,000 and $2,420,000 per month, according to our data. However, these numbers can vary significantly based on your store’s location, size, and other factors.

Experts recommend at least three months of funding to get your supermarket through the startup phase while establishing your customer base. Think of this as protection against emergencies. However, if millions of dollars are not achievable, starting small is ok. As your supermarket revenue grows, you can build up your emergency funds. Learn more about financing and loans here. 

8. Exterior Finishes and Design

It’s easy to overlook the exterior of your building, but you’ll want to invest in sprucing it up, making it yours. Painting your logo, hanging custom signs, installing lighting, and adding light landscaping will not only attract customers but also make the shopping experience a whole lot more pleasant. An exterior business sign alone can range from a few hundred dollars to a few thousand.

Price Range: 1,000 square feet of exterior renovations typically cost between $1,000 and $4,000, and based on national averages provided by Angi, painting the same-sized exterior space will run an additional $3,000.

9. Organizational and Development Cost 

Most retail businesses require some license to operate, but supermarkets are a class unto themselves.  You’ll typically need a business license to operate legally within a specific jurisdiction and permits for handling and selling meat products, which are often regulated to ensure food safety and sanitation. Additional licenses will be required to sell alcohol, tobacco, prepared food items, and lottery tickets. Unless you plan to hire a consultant or lawyer to handle this, it’s a good idea to start your research pronto. You don’t want to be blindsided after the fact.

Price Range: $350 - $2000 for a business license, food handling permits, and health inspection fees. If you serve alcohol, a liquor license costs as little as $100 in Idaho and as much as $1,400 in California. It’s around $500 for a lottery license, which includes the cost of equipment, an application fee, and a government background check 

10. Professional Services

If this is your first foray into the world of supermarkets, you might want a few professionals by your side through the tumultuous startup process. There is one professional that every entrepreneur knows they will need early on: an accountant. And now you can add two more into the mix: a lawyer and a retail business consultant.

A good attorney will assist in every aspect of your business, from permits and licensing to trademarking your logo and formally incorporating your business. A business consultant will guide you in improving your business, from branding development and market research to advising on point-of-sale and technology.

Business consultants typically charge $150 to $200 per hour. The average attorney rate in 2022 was $313.00, but it varies widely, from as low as $150 to $600 or more per hour.

Price Range: between $1,000 and $5,000

11. Technology and Point of Sale

Every retailer needs a point-of-sale system to run smoothly. Most supermarkets require a robust system with technologies for inventory tracking management, customer loyalty rewards, employee scheduling, and payroll.

Consumers love the convenience of ordering groceries online and having them delivered straight to their doorstep. If you plan on adding an e-commerce component to your supermarket, research a great digital ordering system as well. Self-checkout technology and tools that allow customers to scan and pay with their phones are growing in popularity and are also worth investing in. 

Price Range: Get a Quote

12. Staffing and Management

A supermarket is a massive operation, often employing hundreds of workers with varying schedules, from seasonal to part-time to full-time salaried employees. The skill set and experience of supermarket workers vary widely, too, from entry-level baggers to experienced butchers and floor managers. When estimating your costs, keep in mind grocery stores are often open 24 hours a day, and the industry is known for a high turnover rate, which means extra time training new hires.

Price Range: According to the Bureau of Labor Statistics, the mean hourly wage for a retail salesperson in the U.S. was $17.64. When you factor in taxes and employee benefits (if you offer them), the Small Business Administration estimates total employee costs to be 1.25 to 1.4 times their salary.

Industry averages can help you understand how much you can expect to spend when starting a supermarket. But as you build your customer base and grow your business, you’ll need to keep strategizing and researching to keep costs low and see returns on your investment. The industry has been through a lot in recent years, from the advent of online ordering to supply chain issues, but one thing is for sure: in-person shopping is still by far the most preferred way to buy food.

Why Toast Retail is Perfect for Supermarkets

In today's competitive retail landscape, selecting the right technology is essential for both new ventures and established businesses aiming for success. Solutions like Toast retail not only streamline operations, making them more efficient, but also provide invaluable insights to optimize the financial health of the business. 

By harnessing the power of point of sale technology, retailers can gain a competitive edge, improve customer satisfaction, and drive sustainable growth. Choosing the right technology sets the foundation for long-term success, empowering businesses to adapt to evolving market demands and thrive in an increasingly digital world.

The tech that redefined restaurants is now here to transform retail. Supercharge your store with the POS built for high volumes and complexity, offering everything you need to run your business on one platform. Toast's retail offering is a game-changer for businesses like convenience stores, liquor stores, and grocery stores, revolutionizing how they operate and interact with customers. Here's why Toast is the perfect fit for these retail environments.

1. Helps Modernize How You Sell

Toast's intuitive, cloud-based system simplifies daily operations. Its user-friendly interface makes staff training a breeze, ensuring seamless adoption across your team. Whether it's processing payments in-store or integrating with online sales channels, Toast ensures a smooth and consistent experience for your customers regardless of how they shop.

• Intuitive Cloud-Based System: Our intuitive, cloud-based system is easy to learn and easy to use. Say goodbye to complicated interfaces and hello to streamlined processes. Toast is designed to simplify your day-to-day operations, from staff training to consolidated operations, ensuring maximum efficiency and productivity.

• Seamless Payment Processing: Toast’s seamless payment processing easily integrates with online payments for smoother sales every time, no matter how your customers are shopping. This integration ensures a hassle-free experience for both customers and staff, leading to increased satisfaction and faster transactions.

• Flexible Order and Checkout Options: Offer flexible and efficient order and checkout options with reliable hardware including handhelds, kiosks, and guest-facing terminals. Adapt to the diverse needs of your customers and reduce wait times at checkout with Toast's versatile hardware solutions, enhancing the overall shopping experience.

2. Streamline Retail Management

Efficiency is key in retail, and Toast delivers with automated, mobile-first inventory management. Say goodbye to manual inventory tracking and hello to SmartScan, a feature that enables quick product scanning and shelf placement. Managing thousands of SKUs becomes effortless with Toast's intuitive product database and bulk update capabilities.

• Automated, Mobile-First Inventory: Experience the freedom of automated, mobile-first inventory management with Toast. Create and print barcodes in bulk, and take new products from scan to shelf in seconds with our SmartScan feature. Say goodbye to tedious manual inventory tasks and hello to streamlined operations.

• Efficient SKU Management: Easily manage thousands of SKUs with our intuitive product database and bulk updates feature. Modify, reprice, and import multiple products at once, saving valuable time and resources. With Toast, keeping track of your inventory has never been easier.

• Retail-Enhanced Dashboards: Stay on top of your business with retail-specific dashboards and cost-tracking reports. Monitor trends, maximize margins, and ensure your top-selling products are always stocked, empowering you to make data-driven decisions that drive profitability.

3. Tailor Your Customer Experience

Toast empowers you to tailor the customer experience to fit your unique retail concept. Whether you're considering adding food service or expanding your offerings, Toast's flexible platform accommodates creative expansion.

• Creative Expansion Opportunities: Thinking of adding food service to your retail concept? Including Kitchen Display Systems and Order Ready Boards, our flexible platform allows for creative expansion. Explore new revenue streams and enhance the overall customer experience with Toast's versatile features.

• Online Ordering and Delivery Integrations: Give your guests the option to order from home with Toast’s Online Ordering and our third-party delivery integrations. Meet your customers where they are and provide convenience that keeps them coming back, increasing customer loyalty and satisfaction.

• Loyalty Rewards and Personalized Offers: Be your neighborhood's favorite shop (and incentivize repeat visits) with loyalty rewards and personalized offers. Transform one-time shoppers into loyal patrons by engaging with your community and offering enticing rewards, making your store the go-to destination for your customers.

In conclusion, Toast's retail solution is more than just a point of sale system; it's a comprehensive toolkit designed to elevate your retail store to new heights. From modernizing sales processes to streamlining management and enhancing the customer experience, Toast empowers retail businesses to thrive in today's competitive market.

Related Resources

• Best Supermarket POS Systems
• Supermarket Business Plan
• How to Open a Supermarket
• Supermarket POS Software
• Supermarket Marketing Ideas
• How to Design a Supermarket
• Supermarket Ideas and Concepts
• Supermarket Inventory Management
• How Much Do Supermarkets Make
• How to Run a Supermarket
• Supermarket Equipment