Business Overview

Whether for a special event, or just to wind down after a long week, Americans have always enjoyed their wine and spirits. While there are a lot of details that go into owning a liquor store, many find it to be a very rewarding career. You have an opportunity to interact with customers and sales representatives regularly and ensure you’ve made their day a little brighter.

Who is this business right for?

An individual who enjoys the subtle differences from one beverage to the next and is on a continuous quest for more knowledge makes a great candidate. Due to the competitive nature of the liquor industry, owners must possess a deep understanding of the mechanics of running a business and be prepared to be an integral part of the day-to-day activities of running the establishment.

What happens during a typical day at a liquor store?

As the owner, you’ll want to be a visible part of the establishment at all times. Patrons will look to you for advice on a specific beverage, based on their personal preferences and/or event needs. In addition, you will be creating ongoing relationships with your various vendors and sales reps.

As the face of the business, there are a number of behind-the-scenes tasks you’ll need to accomplish daily. Maintaining accurate inventory, protecting your cash flow, and predicting SKU level/product demand requires careful and constant attention. Privately owned liquor stores typically realize a greater profit when structured as an owner-operator establishment. y

What is the target market?

As a rule, your preferred customer is anyone, over the age of 21, who enjoys a tasty beverage and prefers to do business with smaller, local establishments over the large retailer. Before investing in your retail space, conduct research to determine the competition in the areas you’re considering. What types of products do they sell and how successful is their business? What are the likes and dislikes of consumers in the area? This will help you determine if there’s a specific niche you should be targeting and what to stock the shelves with.

How does a liquor store make money?

Liquor stores make money through the sale of each beverage. Some are sold by the bottle, while others are sold in greater quantity, as determined by the distributors.

What is the growth potential for a liquor store?

There is very little ability to negotiate with distributors over pricing, as they have the monopoly on their alcohol brand. This makes competitive pricing between retailers difficult and results in a fairly low profit margin. The only way to secure significant price cuts is by investing in the purchase of large bulk orders, which presents its own set of challenges. It requires deeper pockets and additional space for storage. It’s also important that you understand consumer demand for bulk items, ensuring a timely return on investment.

To combat some of these issues, owners with a significant amount of cash flow find success by either opening a large, warehouse store, or by investing in more than one location. Franchising opportunities such as Wine & Spirits or BevMax offer entrepreneurs inside knowledge and assistance in helping an owner’s vision become a reality.