How Much Do Convenience Stores Make? (Average Convenience Store Revenue Data 2024)

How Much Do Convenience Stores Make? (Convenience Store Profit Margin)

While a 3% net profit margin is typical for most types of retailers, convenience stores tend to perform a little better. In fact, according to Sharp Sheets, a single store operator can reach a 5% or better net profit margin.

Better yet, a chain with multiple stores may be able to reach closer to a 10% net profit margin.

Compared to other food retailers, like supermarkets with their 1.6% to 2.2% profit margins, it’s easy to see why opening a c-store might look pretty enticing.

However, to reach this level of profitability, it’s key that you have a solid understanding of convenience store revenue and costs.

So, in this article we’ll explore how to boost your c-store revenue and reduce costs. We’ll also provide a breakdown of costs for the average convenience store to help you budget for your own business.

Key Takeaways

• Running a profitable convenience store requires you to maximize sales revenue while minimizing operational costs.

• The average in-store c-store revenue in 2022 was $1.85 million, but your revenue potential depends on factors like your location, the size of your store, and more.

• Cost of Goods Sold (COGS) is typically the largest expense for convenience stores. However, rent and labor are also significant costs, along with other smaller expenses.

• Key strategies for reducing c-store costs include improving inventory management, enhancing operational efficiency, and lessening energy costs.

• Some of the best tactics for growing convenience store revenue include improving marketing efforts, implementing technology, boosting average order value, and increasing customer purchase frequency.

Are Convenience Stores Profitable?

While convenience stores can be profitable, it’s important to keep in mind that retail businesses typically operate on thin margins.

As we mentioned above, a single store operator can typically make about 5% net profit, while a chain with multiple stores can make closer to 10% net profit.

Generally, however, a net profit percentage of 3% or higher is typically a healthy margin for retailers, which is especially true for food retail.

So, as with any retail business, it’s key to carefully manage costs and use strategies to boost revenue to achieve profitability.

How Much Does a Convenience Store Make? (Average Convenience Store Revenue)

According to data from Statista, the average annual in-store convenience store revenue was about $1.85 million in 2022. This breaks down to an average monthly revenue of about $154,000.

However, bear in mind that this figure does not include fuel sales, which can often make up a majority of c-store revenue. In fact, of the $814 billion in total convenience store revenue in 2022, $539 billion, or 66%, came from the sale of gasoline.

Additionally, it’s important to remember that your revenue potential can differ depending on several factors, including:

• Location: A store in a high-traffic urban area or near a highway exit will likely see higher revenues than one in a quiet residential neighborhood.

• Store Size: Larger stores can stock more items, potentially leading to higher sales.

• Product Mix: Stores that offer a wide range of products, including high-margin items like prepared foods, may see higher revenues.

• Competition: The presence of nearby c-stores can impact your store's performance.

• Local Economy: The economic health of your community plays a significant role in consumer spending.

Clearly, expectations will vary from store to store. However, the average convenience store might expect to make $92,500 to $185,000 in profits per year based on the average $1.85 million in revenue and 5% to 10% net profit margins.

Costs for Convenience Stores

To maximize your profits, you need to have a clear understanding of your operating costs. So, here's a more detailed breakdown of the expenses you can expect:

1. Rent

Rent will be a significant monthly cost, but it can vary a lot depending on your location and property size.

For example, you’ll pay a much higher rent in a high cost of living area, like New York City, NY, than a lower cost of living area, like Huntsville, AL. However, you’ll also likely be able to charge more for your products in a higher cost of living area.

Likewise, rent costs can vary significantly within the same city. For instance, in New York City, you’ll likely pay a much higher rent in Manhattan compared to The Bronx.

Additionally, the size of your store will have a big impact on your monthly rent expense.

According to Statista, the average convenience store size measured an average of 3,460 square feet in 2022, including both sales and non-sales areas. Meanwhile, a different report indicates the average yearly retail space rent in the United States is $24.69 per square foot in 2023.

This means the average convenience store could expect to pay about $7,100 in monthly rent costs. However, this expense will vary significantly based on the size of your store, location, and other factors.

Alternatively, you could choose to purchase your property outright. While this would be a large upfront cost, it could reduce ongoing expenses in the long run.

• Total Monthly Cost of Rent: $7,100 per month; depending on variables, could be $2,000 - $15,000 per month or more

2. Utilities

Like rent costs, utilities can also vary significantly based on the size of your store and your location. The types of hot food you sell, food preparation techniques, and amount of refrigerated space can also have a big impact.

However, DSO Electric reports that the typical convenience store generally requires 52.5 kilowatt-hours (kWh) of electricity per square foot and 38.2 cubic feet of natural gas per square foot per year.

While the cost of electricity varies from region to region, the US Energy Information Administration (EIA) reports that the average cost for commercial businesses was 12.66 cents per kWH in April 2024.

Multiplying the average convenience store size (3,460 square feet) by the average required kWH per square foot and average rate, the typical convenience store can expect to pay about $23,000 per year for electricity. This is equal to roughly $1,900 per month.

Meanwhile, the average cost of natural gas per 1,000 cubic feet for commercial properties was $10.90 as of 2023. This means the average annual cost of natural gas is about $1,400 per year, or a little over $100 per month.

Remember, though, that this expense will depend on the size of your store and its energy requirements.

• Total Monthly Cost of Utilities: $2,000; depending on various factors, could be $500 - $2,500 or more per month

3. Insurance

There are several types of insurance you’ll want to secure for your convenience store. According to Next Insurance, you should obtain at least the following types of coverage:

• General Liability Insurance: Protects you from financial losses involving customer injuries, copyright infringement, and accidental damage to someone’s property

  • Estimated Cost: $54 to $233 per month

• Workers’ Compensation Insurance: Helps pay for medical bills and lost wages if an employee suffers an injury while working

  • Estimated Cost: $25 to $102 per month

• Commercial Property Insurance: Helps with repair and replacement costs for equipment, inventory, and real estate due to damage from covered events

  • Estimated Cost: $34 to $107 per month

Keep in mind that there are other types of insurance you may want as well. It may be a good idea to work with an insurance advisor to determine all the types of coverage you might need.

• Total Monthly Cost of Insurance: $100 to $500 or more depending on your location, store size, claims history, and the types of coverage you secure.

4. Inventory

As with most retail businesses, the largest expense for your convenience store will likely be your inventory. In fact, a Projection Hub analysis found that c-stores, on average, spend 53% of their revenue on cost of goods sold (COGS).

This means that the average gross margin is 47%. Gross margin is the amount of revenue left over after deducting the cost of goods. You then use your gross margin to pay all other expenses, eventually leaving you with your net profit margin.

Using the average in-store convenience store revenue of $1.85 million, you can expect to pay $980,500 towards inventory each year, or about $81,700 per month. This would leave you with about $72,450 to cover your all other expenses and make a profit each month.

Remember, however, that your cost of goods sold can vary based on your product mix, as well as your supplier relationships. The lower you can get your COGS, the higher your gross margin will be. The higher your gross margin is, the more profit you may be able to make.

• Total Monthly Cost of Inventory: $81,700 per month, though this can vary significantly based on several factors

5. Labor

Labor is another one of the biggest expenses for convenience stores. The Projection Hub report we mentioned above indicates that c-stores spend an average of 8% of revenue on salaries and wages. This includes wages, payroll taxes, and potentially benefits.

Furthermore, they spend an additional 3% of revenue on contract labor. Overall, this means the average convenience store has an average 11% labor cost. 

For a c-store making the average revenue of $1.85 million per year, this expense is equal to $203,500 per year, or nearly $17,000 per month.

However, like many of the costs in this breakdown, this cost can vary a lot. Several factors can affect your labor cost percentage, including:

• Minimum wage laws

• Local competition in pay rates

• The number of staff you need to employ

Remember, though, that helpful and friendly staff can make a big difference in retaining customers. While minimizing costs is important, it’s also key to ensure your workers are satisfied so they feel encouraged to perform their job well and exceed customer expectations.

• Total Monthly Cost of Labor: $17,000, though this can vary significantly based on several factors

6. Marketing

Implementing effective marketing strategies can be a great way to entice customers and generate more revenue. This can include local advertising, promotional materials, and digital marketing efforts.

While Projection Hub reports that the average convenience store spent 2% of revenue on marketing, HubSpot recommends spending between 2% to 5%. For the average convenience store, this would be $37,000 to $92,500 per year, or about $3,100 to $7,700 per month.

It may make sense to begin with a small budget and test out a few different strategies. Then, once you’ve got a better idea of what works best, invest more in those strategies so you can see bigger returns.

• Total Monthly Cost of Marketing: $3,100 to $7,700 per month

7. Credit Card Processing Fees

While some customers still prefer to pay with cash, it’s clear that credit, debit, and mobile payments have taken over. Unfortunately, this also means you need to pay transaction processing fees.

These fees typically amount to about 2% to 3% of every transaction, meaning it’s a key expense to budget for.

For the average convenience store making $1.85 million in annual revenue, they can expect to pay $37,000 to $55,500 per year in these fees.

• Total Monthly Cost of Credit Card Processing Fees: $3,100 to $4,625
  

8. Maintenance and Repairs

It’s also key to budget for the maintenance and repair of your equipment. According to Accruent, the average convenience store spends about $38,000 on maintenance and repair each year. 

While the most expensive work orders are for fuel pumps, other costs include:

• Building and property maintenance (averaging 11% of total work order spend)

• In-store alarms (averaging 8.5% of total work order spend)

• Planned preventative maintenance and compliance (averaging 10% to 20% of total work order spend)

Remember, it’s a good idea to schedule preventive maintenance to avoid more costly repairs in the future. This can help save you money in the long run. 

However, unexpected breakdowns do happen, and it’s key to be prepared if that scenario arises.

• Total Monthly Cost of Repairs and Maintenance: $3,200, though this can vary depending on the the type of equipment you have and the condition it’s in

9. Miscellaneous Expenses

Finally, it’s important to keep other miscellaneous costs in mind as you develop your budget. Some of these expenses might include:

• Operational equipment leases, like POS systems, ATMs, or specialized equipment such as coffee machines (generally costs $200 to $1,000 per month)

• License and permits renewals, like tobacco, alcohol, lottery tickets, and other various types of licenses (generally costs $50 to $200 per month)

• General supplies, like pens, paper, cleaning supplies, and more (generally $50 to $100 per month)

Finally, be sure to think about any additional expenses your store may face so you can budget for them appropriately.

• Total Cost of Miscellaneous Expenses: $300 to $1,500

How To Reduce Convenience Store Costs

While there are lots of costs involved in operating a convenience store, there are also plenty of steps you can take to minimize those expenses.

Below, we explore some key strategies you can employ to keep your costs from eating too much into your sales revenue.

Optimizing Inventory

As we mentioned above, one of the biggest expenses your convenience store will have is inventory, which could take up 50% or more of your revenue. So, it’s key that you look for ways to reduce your cost of goods sold (COGS).

One of the best ways to optimize your c-store’s inventory management is with the use of inventory management software. This will help you reduce waste by closely and accurately monitoring expiration dates and sales patterns.

Additionally, you can use data analytics to identify your best-selling items and adjust your stock accordingly. Also, think about focusing on high-margin items like prepared foods, coffee, and private label products. 

One more way to reduce inventory costs is by managing your supplier relationships. Consider using these strategies when working with suppliers:

• Build strong relationships with your suppliers and explore bulk purchasing options.

• Compare prices from multiple suppliers to ensure you're getting the best deals.

• Consider joining a buying group to leverage collective purchasing power.

Remember though, there’s more to your supplier relationships than just costs and margins. As Blake Weber, retail technology project manager at Clarkston Consulting, said in an interview with Convenience Store News:

“Rather than selecting suppliers based on costs and margins, c-store operators are evaluating relationships more holistically through the lens of creating long-term, mutually beneficial — and profitable — partnerships that will ultimately provide the best experiences for their customers.”

Ultimately, your inventory management strategy should not only keep costs low, but assist in creating an excellent customer experience.

Improving Efficiency

Another great strategy for reducing your operating costs is by improving the efficiency of your c-store. Now, there are a few ways you can go about this.

One of the best strategies is to implement new technology, like a comprehensive POS system. This can help you with everything from inventory and staff management to sales reporting and more.

Building on this, you can regularly review your sales data to identify trends, popular items, and peak business hours. Then, you can adjust your inventory, staffing levels, and store layout based on the insights.

Additionally, it’s a good idea to cross-train your staff. This way, they can fill in for one another if someone calls in sick or unexpectedly quits. It will also help them better support one another, as they’ll have a better understanding of each other’s roles.

Finally, one more idea for improving your convenience store’s efficiency is to integrate self-checkout options. This not only helps customers get in and out of your store quicker, but also lessens the needs for employees, which could reduce your labor costs.

Reducing Energy Costs

Reducing your energy costs can be another good tactic for decreasing your total monthly expenses. While this may require an upfront cost to begin with, you may be able to save money in the long run.

So, consider the ideas as you look for ways to reduce your total energy consumption:

• Invest in energy-efficient lighting and refrigeration systems.

• Implement smart thermostats to optimize heating and cooling.

• Consider solar panels or other renewable energy options for long-term savings.

Ultimately, investing in energy-efficient solutions is not only better for the environment, but also better for your bottom line.

Continuing To Learn

Perhaps the most important aspect of successfully reducing your convenience store costs is to continuously educate yourself. So, consider attending industry conferences or trade shows to learn from others who’ve been successful.

You might also consider joining a local business association to network and understand how your peers have reduced their operational costs.

Of course, it’s also key to plan for the future by setting both short-term and long-term goals for your business.

Therefore, consider creating a financial plan that allows for reinvestment in your store. Ultimately, this will lead to sustained success.

How To Increase Convenience Store Revenue

Of course, reducing costs isn’t the only way to increase profitability! 

You can also take steps to boost revenue, which we discuss in more detail below.

Improve Marketing

One effective way to increase the sales revenue for your convenience store is to improve your marketing efforts. 

There are tons of marketing strategies you can employ to drive more customers to your business. For now, let’s look at some high-level marketing tactics for c-stores:

• Use Social Media: You can use social media platforms, like Instagram and Facebook, to engage with local customers by sharing daily specials, new product arrivals, and behind-the-scenes content. Additionally, you can engage with customers by promptly responding to their comments and messages.

• Offer Loyalty Programs: Consider implementing a loyalty program where customers can earn rewards with each purchase. You might also offer exclusive discounts or early access to promotions for loyalty program members.

• In-Store Sign Displays: Use creative signage and product placement to draw attention to high-margin items. Additionally, rotate your displays regularly to keep the store looking fresh and interesting.

• Leverage Email Marketing: Collect customer email addresses and send targeted promotions and updates. You can even use segmentation to personalize offers based on their purchase history.

Ultimately, some marketing strategies will work better than others depending on what your specific customers want. So, get creative and try out a few different tactics to see what works best.

Once you have a good idea of the strategies that work best, invest more in them so you can see a bigger return on investment (ROI).

Use Technology

We already mentioned a few ways in which technology can help you reduce costs. However, the right tools can also help you boost revenue.

For example, think about implementing the following solutions:

• Comprehensive Payment Processing: Use a POS System that accepts multiple types of payments, from credit and debit card to mobile wallets, like Apple Pay.

• Inventory Management Software: The right POS system can also help you manage inventory, ensuring optimal stock levels at all times.

• Provide Online Ordering Options: Let customers place their order ahead of time so it’s ready as soon as they walk into the store. Additionally, consider integrating third-party delivery apps, like DoorDash.

• Offer Self-Checkout: Self-checkout helps customers get in and out of your store quickly, improving the customer experience.

• Consider Digital Price Tags: Digital price tags allow you to make quick price updates, as well as display promotional information.

Overall, incorporating technology not only helps your store’s operational efficiency, but also improves the customer experience. 

Increase Average Order Value

Another key strategy for boosting your store’s revenue is to employ tactics that encourage customers to spend more on each visit.

Now, this doesn’t mean you should simply raise the prices of your products. After all, this could make you less competitive in the market and make customers want to shop elsewhere.

However, there are plenty of effective strategies you can use to increase sales value:

• Offer Premium Products With High Margins: Stock gourmet snacks, locally-sourced items, or trendy health foods and display them prominently to grab customers’ attention.

• Provide High-Margin Services: Like premium products, high-margin services like ATMs, money transfers, or bill payment services are great ways to boost revenue.

• Create Bundled Deals: Offer small discounts on bundles of complementary items, like coffee and a pastry or a sandwich and drink, to encourage larger purchases.

• Consider Upselling: Teach employees to politely suggest add-ons or upgrades, and encourage them to inform customers about current promotions.

• Implement Strategic Product Placement: Place impulse buy items near the checkout area, and use end-cap displays to showcase promotional or seasonal items. Consider experimenting with different products to see what works best.

• Explore Partnerships: Consider partnering with other local businesses to offer unique products or services not available at other c-stores.

Finally, be sure to stay up-to-date with local trends. Keep an eye on demographic changes in your area and be prepared to adapt your product mix to meet changing customer needs.

Increase Customer Purchase Frequency

One more great way to boost your convenience store revenue is to encourage customers to visit more often. After all, the more often customers come to your store, the more money they’ll spend.

So, to encourage more frequent customer visits, consider incorporating the following ideas:

• Host Community Events: Organize tastings, local vendor showcases, or family-friendly activities.

• Sponsor Teams or Events: Sponsor local youth sports teams or school events to build goodwill within the community.

• Offer Daily or Weekly Specials: Create a recurring special schedule, like “Taco Tuesday” or “Fresh Coffee Friday.” These deals can be especially effective to draw in customers during typically slower times.

• Ensure Consistency: Provide high-quality products and services consistently.  Regulaury train staff on customer service best practices, maintain a clean, well-organized store, and quickly address all customer complaints or concerns.

• Consider Extended Operating Hours: If there’s demand in your area, consider staying open later or opening earlier. Just be sure to advertise your new hours to attract shift workers or early risers.

The ideas above are all great ways to increase customer retention, encouraging them to visit your store more often.

Why Toast Retail is Perfect for Convenience Stores

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 Convenience Store POS Systems
• Convenience Store Business Plan
• How to Open a Convenience Store
• Convenience Store Equipment
• Convenience Store POS Software
• Convenience Store Marketing Ideas
• How to Design a Convenience Store
• Convenience Store Ideas and Concepts
• Convenience Store Inventory Management
• Cost to Open a Convenience Store
• How to Run a Convenience Store