Off License

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danman3309

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Nov 17, 2009
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Hello all,
I have just joined and been going through the different discussions and have to say its very interesting.
Right will cut to the chase.

I am planning to open a Off License and have spotted a shop that I want.I would like some advice from the vetereans out there on the below;-

1. Is it advisable to go for a already running offlicense or take a vacant shop and change it to one?
2.What kind of weekly turnover(8-10k weekly?) would you be expecting ,if you are looking for around 45k/yr profit?
3.The profit margins on Paypoints,Lottery & newspapers?
4.what products are your high income generating ones?

Any feeback would be much apprciated.
Thanks
Danman
 
Personally I would go for an established business, which will give you some idea of the turnover and where you can improve on it.

Things like Paypoint, Lottery etc even Gic sales are known as loss leaders, they bring people in and whilst there the majority of customers will buy something smaller that you wouldn't have generally got the sale for.

Where ever you open your business, seek what is missing in the community and where possible supply it even if minimal profit involved.

Best of luck
 
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DAbusinessconsultant

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Feb 6, 2008
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Bristol
Probably as mentioned best to go for an 'established' store. It is far quicker to get in to and get some experience as well as having some form of customer base to gauge profits from.

Setting one up from scratch can mean needing planning permission to change premises depending on what the unit is registered as, then you need to purchase stock, establish stock mangement systems etc. Then you need to make sure its in a good area where you won't have any competition (or little) and that people will have a reason to use you so that you can make a sufficient markup on the product. You will also need to make sure ALL products were priced competitively to make sure people don't feel like your ripping them off. You would also need to buy shop frontage and fittings etc.


Taking over existing units makes sure all this is done already so saves a fair bit of time / money / stress.

Although if you like that sort of thing then get a new unit :) lol
 
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danman3309

Free Member
Nov 17, 2009
7
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Thanks for the info
Over the board ..what kind of profit margins would you expect?
and
With tenacy agreements what is the best way forward. Would you guys reccomend a break clause every 1/2 yrs?
and any suggestions on repairs to be included in lease agreement?

thanks
D
 
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MikeD08

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Jul 24, 2008
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Cheshire
I'd keep an eye on developments with regards to First Quench (?) and the Threshers chain.

It maybe that they off-load shops to raise capital so you would have an established customer base already (in theory!) and a fully fitted shop.

I'm sure you have considered this, but competition from supermarkets would play a big part in your business.
 
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DAbusinessconsultant

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Feb 6, 2008
218
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Bristol
I am by no where near an expert in this field and just in the process of trying to sort of a premises for a new cafe. Well it depends on the location and competition. If I was near other off licenses I would be looking to undercut their prices meaning profit margins would be lower than average but bank on being used more frequently and having other products purchased (eg: selling a can of coke for 50p rather than the usual 60p) etc.

Generally speaking you can negotiate better rates for the longer you take out the lease for so it depends on how badly you want the premises for. We are looking at a 7 year lease and have no intentions of asking for a break clause until possibly the second year (although this would be a different partners area and would need to be looked in to the possibilities)

I would try and negotiate for major structural repairs to be done by the owner whereas small ones to be done by yourself. Things like dodgy taps can be done yourself but for major work like pipe bursts try get this to be done by the owner.

Not sure if thats any help but thats similar to what we are looking in to.

If you are going to renovate the property in any way it may also be worth trying to use this as a bargaining point such as if you need a new kitchen etc.
 
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oldeagleeye

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Jul 16, 2008
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Stop dreaming. Few off-licences earn £45K net. For most owners it is a 12 hour day at less than the minimum wage even if you pay £30,000 to buy the place. Typical gross profit btw is about 20%. Allowing for cigs's at about 4% you looking at around 12.5% and that is the figure in fact that HMRC work on regardless of what the books say. Anything above could be viewed as money laundering. Anything below evasion of duty.

I am in fact even surprised that you are asking these qusetions. Go to your local cash & carry. They will sign you in for a day and you will find that typically there is about £2 quid to be made on a bottle of vodka or so it seems but there is bound to be one local suprermarket selling £4 off and the same applies to most wines. Crates of beers are even worse.

The bottom line OP then is when it comes to local corner stores or off-liences follow the money. In the 50's to 70's it was the Jewish community that owned most of the deli and corner stores. Then came the Asians and now we have the new Europeans like the Turkish. All rely on families to make such a business venture viable. As Mike pointed out Threshers have found to their costs they can't even make a profit out of payning min wage. Forget it.

Robert
 
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TotallySport

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Jul 18, 2007
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We are looking at a 7 year lease and have no intentions of asking for a break clause until possibly the second year (although this would be a different partners area and would need to be looked in to the possibilities).

Once you have signed a lease your fixed, there is no way a landord will give you a break clause after you have signed the lease, get it in at the start and make sure it's there before you sign, the downside to a break clause is you will not be able to get the biggest reduction at the start as you might leave part way through.
 
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oldeagleeye

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Jul 16, 2008
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You all seemed to have missed the point. Even with free rent an off lience is a no brainer on the ROI on stock alone.

As for landlords of commercial properties I think that are in for a rude awakening as far as small business is concerned now that people can get info from the Internet.

Those big shopping centre devolpoers for instance provide huge stores for free to the likes of M & S or Smiths in the hope to sell footfall numbers to smaller businesses. Don't fall for it. Almost 50% of our high street shops are boarded up. In your in retail then ask the landlord to pay YOU £50K a year to take on one of them and no rent to pay for at least 3 years.

Robert
 
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TotallySport

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Jul 18, 2007
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I think if your after a massive wage then yes an offl ience is not the way to go, but I think if you want about 30k a year and are willing to work for it then that is fairly achiveable, but it will never make you rich.

and there are easier (thats probibly the wrong work) ways to make money, things like sandwich shops have a much better GP and shorter opening hours.
 
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We have 2 wine shops, i prefer that to off licence, one we bought already established and one was a vacant premises. The pain with the vacant premises was obtaining a premises licence and starting from scratch ie customer base!
Profit wise really does depend where you are based, is it in town, based on tourism, other competition and supermarkets. To make 45k you would need to make 10k a week at least. Its not easy trust me!!!:)
Anything else just ask or pm
 
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Stop dreaming. Few off-licences earn £45K net. For most owners it is a 12 hour day at less than the minimum wage even if you pay £30,000 to buy the place. Typical gross profit btw is about 20%. Allowing for cigs's at about 4% you looking at around 12.5% and that is the figure in fact that HMRC work on regardless of what the books say. Anything above could be viewed as money laundering. Anything below evasion of duty.

I am in fact even surprised that you are asking these qusetions. Go to your local cash & carry. They will sign you in for a day and you will find that typically there is about £2 quid to be made on a bottle of vodka or so it seems but there is bound to be one local suprermarket selling £4 off and the same applies to most wines. Crates of beers are even worse.

The bottom line OP then is when it comes to local corner stores or off-liences follow the money. In the 50's to 70's it was the Jewish community that owned most of the deli and corner stores. Then came the Asians and now we have the new Europeans like the Turkish. All rely on families to make such a business venture viable. As Mike pointed out Threshers have found to their costs they can't even make a profit out of payning min wage. Forget it.

Robert

It would help if you knew what you were talking about, for sure cigarettes and spirits don't carry much profit if any but we have 2 shops, have a very comfortable lifestyle and don't work 12 hour days!
 
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danman3309

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Nov 17, 2009
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oldeagle...i see your point.. as many shops on the road where this shop is located are boarded up and prospective retailers have a lot of bargaining powers unlike before .
However there is market for a offlicense here..selling alcochol,ciggies, crisps and basic stuff and some money to be made.The reason why the previous owner is put it up on the market is because he is too old to run it and his kids are not interested.
Maybe I am finding too many reasons to like it ...however the postings have led me to believe that i can actually push the price down when it comes to the rent with this...which is good!!

Any idea of footfall numbers for a given day? just a ball park figure for a ur normal corner shop!!
 
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oldeagleeye

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Jul 16, 2008
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I think it is fair to say in this case without infringing rules I am perfectly entitled to say WHAT an absolutely stupid response from you Love2Hire. I quote

It would help if you knew what you were talking about, for sure cigarettes and spirits don't carry much profit if any but we have 2 shops, have a very comfortable lifestyle and don't work 12 hour days!

You say for instance cigarettes and spirits don't carry much profit it any. That is EXACTLY what I said. Pray tell me then. What else does an off-licence sell - wine and beer.

Well as I again mentioned - nip into your local supermarket. Most of the best selling brands of wine are at 50% off. You can't buy at that price. That is why you see the owners of off-licences buying half a dozen bottles scratching around to make a few extra pounds. As for beer.

There is about 16% GP to be made on a crate of strong larger's. The 3 best sellers Carlsberg - Stella & Fosters you can buy at about a 34% discount but there is vat on that so the true figure is about 27%. Again the supermarkets are slashing prices by up to 50%.

So you tell me buddy. Where have I got it wrong so far. In fact everything I said in that post was right on the button. Surely you must see that.

I said the typical GP was around 12.5%. You say yourself that you would have to take over £500,000 a year to leave £45K and after allowing £20K rent-rates & utilities that is EXACTLY what is left - BUT not for the owner. Oh - no. To take 500K you going to have to employ at least 2 people.

On the minimum wage that is just over £25K a year. Add NI insurance etc and holiday pay and your talking over £30,000. So now our Offie owner is left with less than £15,000. To earn that there is a days book work a week to be done. 2 half-days at the local c & c. There are the double shifts to cover at weekends when the under age yobs come out in force.

IS an off-licence a viable business venture these days when you invest a lot of time and money. When the police send in 14 year olds that look 20 to try to trick you into selling under age. When Customers & Excise are likely to pounce on you and carry out an audit at any time. When all you have got left from a business open 24/7 and 365 days a year and taking over £500,000 year is little more than the minimum wage for your efforts.

I don't think so and so I'll stick by my original advice - thank you very much LTH and in doing so may I respectfully suggest that you don't shoot your own argument to bits in future by contradicting yourself with opening remarks and then going on to agree with everything the poster has said. In this case me.:eek:

Have a nice day.

you know what they say. It's in the sig.
 
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Back at the original question:

From an outside perspective, I would certainly go for something with existing licences and, if possible, fitted out. Most of the retail ventures we see start off back-footed because of delays and overspend in fit-out and licence applications. (Remember, Logal Government don't give a toss about your business..)

From a prospective customer's point of view, I think you will need to seriously consider your USP, as you will never win a price war with the supermarkets. However if you can differentiate yourself (eg as a quality wine reseller) you can keep your margins intact. One client of ours has installed wine sampling machines, effectively selling samples, which is working well.

Best of luck!
 
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oldeagleeye

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Jul 16, 2008
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I appreciate what you say about a specialist FP but I think the OP was talking typical corner shop in a place where half the other shops are boarded up. Not exactly the heart of the wine trade. That is btw however. The whole point with any business surely is to look to the future and ROI

With Offie's and indeed newsagents one of the biggest customer attractions is under threat. I refer of course to cig's. Either people are given up in droves or they will soon have to be sold under the counter. So OK - the profit margin ain't worth a lot but if you sell 500 packets of fags a week and six months later that trade has dried up you will probably have lost 75% of your other trade as well so even with free rent the business wouldn't survive.

With no disrespect to Danman I don't think his proposed venture would anyway because he knows nothing about the business. Once the local yobs find that out and they quickly will they will make his life a nightmare. Forget armed robbery. They will just walking in team handed and take what they want off the shelf. Call the police and he will probably have to wait until the pubs in the town centre have long closed and even then they will do nothing.

Now least anyone think I am being negative I am not but the purpose of this forum is to offer advice the bad and the good. I'll come back to the good later. For now I need a nice chilled glass of white burgandy. An absolute bargain @ £2.99 from Lidl. £7.95 in my local Offie and that diffference guys is a nice fillet steak.
 
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oldeagleeye

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Jul 16, 2008
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The wine is heavily discounted so yes. As far as the palate goes I also like that rough cheap Spanish brandy at 4 am in the morning with some good Brazilian coffee.

Now get out there and hire some more pushchairs out instead of trying to get one back on me. It ain't going to happen.:eek:

Robert
 
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