Asking “how much does it cost to open a liquor store?” is kind of like asking “how much does a bottle of wine cost?”
It depends.
When asked how much a bottle of wine costs, most seasoned liquor store salespeople would ask a follow-up question like, “how much are you looking to spend?”
If you’ve never bought a bottle of wine (or opened a liquor store) before, you might not have a reasonable guess, which is perfectly understandable.
Let us save you some time.
The average cost to open a liquor store in America is somewhere between $50,000 and $100,000.
If that’s all the information you came for, great! We’re glad we could help.
If you’re interested in learning more about how that number breaks down, you’re in the right place — that’s exactly what we’re going to do in this article.
By the end of this article, you’ll have a better understanding of the upfront, ongoing, and phantom costs of opening and operating an independent liquor store.
The True Cost of Opening A Liquor Store
Similar to buying a home, opening a liquor store comes with a variety of costs that can be put into three general categories.
The first are upfront costs. These are the costs associated with just getting started, and include things like mortgages, permits, and inventory.
Next are ongoing costs. These are the recurring monthly costs of running a business. Ongoing costs can include things like payroll, insurance, marketing, and advertising.
Finally, there are phantom costs, also called hidden costs. These could be one-time costs or recurring monthly expenses, but they’re less obvious and sometimes overlooked in the budgeting process.
This article will break down these three types of costs — upfront, ongoing, and phantom — and provide real numbers to help you decide if the liquor store business is right for you.
Throughout this article, you might see some numbers that seem rather large, so make sure you read to the end to see why the liquor store business is a great one to get into.
Let’s begin by looking at the upfront costs of opening a liquor store.
Upfront Costs to Consider
The first cost to consider for your liquor store is a mortgage or rent. This article will assume you’re renting your retail space, which is quite common for business owners.
We’re also going to assume you’re paying the average cost for retail space in America — about $18 per square foot.
If your retail space is 2,000 square feet, you can expect to pay about $36,000 per year or $3,000 per month in rent.
Next are licenses or permits, which are a legal requirement to sell alcohol in the States. Again, costs can vary, so depending on your state, you can expect to pay between $300 and $14,000.
To get you in the ballpark, let’s take the average cost and assume it’s about $7,150.
You’ll also need to register your business, a cost of about $300.
Of course, you can’t run a liquor store without any liquor to sell, so you’ll need to purchase your initial inventory.
An initial inventory purchase order will cost around $35,000 to get you a respectable selection of beer, wine, and spirits.
Here’s a quick summary so far:
- Rent ($3,000/month)
- License or permit ($7,150)
- Business registration ($300)
- Inventory ($35,000)
So far the upfront costs are $45,450 — before we factor in ongoing and phantom costs. Let’s look at ongoing costs next.
Ongoing Costs to Consider
When discussing ongoing costs, we’re referring to recurring monthly or annual costs.
One of the most common ongoing costs to consider is payroll. It’s impossible for us to know what your payroll costs will be without first knowing how many employees you’ll have.
As an estimate, let’s take the national average minimum wage (approx. $12/hr) and multiply it by 150 hours, which is the average number of hours full-time employees in the U.S. work per month.
Under the above conditions, the total cost per employee is $1,800 per month.
If you choose to pay for 50 percent of your employees' health benefits, you can expect to pay roughly $4,000 per year per employee. That works out to $333 per month per employee.
Your business will also need to be insured, which bears an average cost of about $100 per month.
If you want your liquor store to be as successful as possible, you’ll also need to invest some capital in marketing and advertising.
Even though we’re listing marketing and advertising as an expense for your business, it’s really an investment — one that drives sales.
A Small Business Trends report indicates that retail stores spend roughly four percent of revenue on marketing and advertising.
Therefore, if your liquor store does $100,000 in sales each year, you’d spend about $4,000 per year or $333 per month on marketing and advertising.
Finally, your business will need to pay for utilities in order to keep the heat and lights on. The average utility cost per square foot of commercial property is $2.10.
For our hypothetical 2,000-square-foot liquor store, that averages out to $350 per month.
Here’s a quick summary of the ongoing costs so far:
- Payroll ($1,800/month per employee)
- Employee benefits ($333/month per employee)
- Business insurance ($100/month)
- Marketing and advertising (4% of annual revenue)
- Utilities ($350/month)
The ongoing monthly expenses for a store with three employees are approximately $6,849 — plus marketing and advertising costs.
Phantom Costs to Consider
These are costs that are necessary but often overlooked.
Let’s start with the cost of your website. If you want to be a competitive business person, you need to have a website — more to the point, you need to be able to make sales through your website.
Web design prices can vary as much as the cost of a bottle of pinot noir. But we’d like to be a little more specific than that.
The going rate in 2022 to build a modern, professional small business website is about $5,000-$10,000.
To follow suit with earlier examples, let’s pick a number in the middle and say a website will cost about $7,500.
Next is signage. You’ll need a sign in the front of your business to let people know what you do. This will cost somewhere between $2,000 and $3,000.
To run a successful liquor store business, you’ll need a point of sale (POS) system to help you keep track of inventory, process payments, check IDs, order from distributors, and so many other things that are critical to running a successful business.
For our Bottle POS system bundle, you can expect to pay $999 for the hardware and $29 per month for the software.
If the retail space you’re renting isn’t already set up as a liquor store, you might have to purchase shelving to display your bottles as well.
The cost of shelving for a liquor store varies, like everything else — but a good estimate is about $7,000.
To summarize, the phantom costs when opening a liquor store are:
- Website ($7,500)
- Signage ($2,500)
- Bottle POS hardware ($999)
- Bottle POS software ($29)
- Shelving ($7,000)
That puts the total phantom costs to open a liquor store at $18,028.
The Next Step Toward Opening a Liquor Store
First, take a deep breath.
You’ve just read an article that says in order to open a liquor store it’s going to cost $70,000 or more.
While that might be true, owning a liquor store can be a wise business decision for the following reasons:
- The liquor business is recession-proof.
- Products are shelf stable and won’t expire quickly.
- There’s year-round demand.
- There’s relatively low competition due to limited licenses per area.
- You have a replicable business model if you decide to open multiple locations.
Now that you have a rough estimate of how much it costs to open a liquor store, you might be ready to take the next step — or at least look into it a little further.
Of course, the actual cost of each category will vary depending on where you live, as well as the amount of capital you have at your disposal.
If you’d like to read more about how to open a liquor store, check out this article titled How to Open a Liquor Store in 5 Simple Steps.
While you might be able to save on costs in certain areas, such as signage, shelving, and rent, one thing that’s worth going for the best available option is your liquor store POS system.
The right POS system can help maximize profits in the long run by reducing waste and theft, identifying top-selling products so you can reorder them, as well as starting and creating a customer loyalty program to help you get more repeat customers.
If you’d like to speak with one of our POS sales representatives about the right liquor store POS system for you please, schedule a demo with one of our experts.
Want to see Bottle POS in action? Schedule a Demo!
