Find Out If Buying A Liquor Store Is A Good Fit For You
If you find different types of liquors and wines intriguing, and you enjoy working with people such as customers, vendors and employees, then owning a liquor store is probably a great fit for you. Owning a liquor store, and operating it well, can be a highly profitable venture. Ideally, buying a well-located, profitable and well-run liquor store is a solid financial investment that can pay dividends for years to come, plus a big financial pay-off when you sell the business down the road.
Considered an “essential business” and competitively limited by ABC licensing, liquor stores offer business buyers an opportunity to own a goldmine that are hard to replicate, can’t be out-sourced and don’t shut down during pandemics. They are also relatively straight-forward to learn to operate within a short period of time.
Typically, Liquor Store owners manage and order inventory, meet with distributors, manage employees and, of course, help customers. To make their business thrive, they should always be thinking of ways to market their business to remain competitive.
Still, it’s not a business for everyone. It takes the right type of interests, mindset and skills to successfully operate a liquor store. Here are keys to keep in mind if you’re thinking about buying a liquor store.
Important Questions To Consider Before Buying A Liquor Store
1. Liquor Stores Are Regulated By The State.
In California, the Alcohol Beverage Board (ABC) heavily regulates liquor stores and issues their operating license. To be a successful liquor store owner, you must learn the relevant California laws and regulations to operate your liquor store lawfully.
The ABC will require you to pass a background check before you can buy a liquor store. You must disclose everything to the ABC regarding any prior criminal activities or risk rejection. Check out our ABC article and video to help you understand what to expect.
ABC will also test whether you are operating lawfully. For example, they hire teenagers to pose as underage buyers. If you sell to an underage buyer, then you will risk losing your ABC license, possibly face criminal charges and be assessed punitive fines.
You need to honestly ask yourself whether being regulated by the ABC, as well as other governmental units (like taxing authorities) is something that you can abide by. If you find that intolerable, then owning a liquor store is not right for you.
Find out more about how to Transfer A California Liquor License In A Business Sale.
2. To Be Successful, Liquor Stores Must Be Managed Well.
Without a doubt, the most lucrative liquor stores that we’ve sold are those that are very well managed by business owners with strong business acumen. To be successful, Liquor Store owners must know marketing, sales, operations, and how to properly manage employees.
The smart owner invests in capital. They will install technology to automate and track inventory along with an integrated POS and security system. This investment limits theft and waste. It also tracks what is selling well so that the owner can double-down on the right inventory at the right time.
Liquor Store owners must have good customer service skills and be highly knowledgeable about their inventory. They need to be informed about what their customers like and what sells well in their location. They should also be open to experiment with new products.
3. Liquor Store Inventory Levels Must Be Carefully Controlled
Liquor store inventory is expensive. Properly buying inventory is an essential skill that liquor store owners must master.
To control costs, liquor should be purchased in bulk but no so much that it results in excess, unsellable inventory. The owner must find the balance of buying sufficient inventory to maintain high inventory turns and avoid warehousing stale inventory.
The right balance can be struck when the Liquor Store owner is aware and informed about their customers’ buying habits. What sells quickly? They should also promote those products that yield the highest profit margins. As stated, it’s a good idea to stay up to date on liquor marketing trends and sample new products to ride the wave of popular sales. The smart owner also avoids over-stocking products based on a discount bulk buy.
4. A Great Liquor Store Location Is Essential
Location is the key to success. It’s important to find a liquor store that is in a location that is not saturated with competition. Avoid high crime areas to control for theft, and risks of harm to yourself and employees. The higher the foot traffic, the greater the sales. Having a clean, well-lit and nice looking store front is a solid investment. It is also very important to have ample, free parking.
Given how important the location is, carefully review the lease. It’s important to understand all the risks involved, the duration, options to renew, and the lease costs, particularly if you have a triple net (NNN) lease. NNN leases include the payment of tax, insurance and exterior maintenance over and above the base rent. Determine whether there are caps to the NNN to control for excess costs in a given year.
Once you’ve bought the liquor store, develop a good relationship with the landlord. This can be a long-term relationship and having the landlord in your corner is an advantage to successfully operating your business.
Before buying a liquor store, it is a good idea to become informed about zoning regulations affecting the location and whether there are any anticipated changes.
5. Learn to Merch!
Strategically merchandising your products is an art form. The merchandise should be organized in such a way that makes the customer experience positive. This is another essential skill that with a bit of practice and coaching, will make a big difference to your bottom line.
Make your store easy to navigate for your customer. A clean, well-lit, organized and well-stocked store invites a customer to shop and purchase. Avoid cluttering and over-stocking which overwhelms customers.
6. Become A Savvy Marketer
Learning to market your business is a wise investment of time, effort and money. Doing it right affords a huge ROI. Track marketing trends that are working through various retail associations.
Depending on where your liquor store is located, you might want to think outside of the box and try new things that will translate into higher sales. For example, if you have substantial wine sales, you might consider hosting tasting events. Another option might be providing local delivery services if it complies with local laws. This can be especially beneficial for party planners and for late night parties.
It is also beneficial to develop customer loyalty by providing reward savings. Offer wine or beer clubs with discounted promotions, exclusive offers and special discounts.
The most important marketing caveat is to know your customers. When you know your customers, then you will know what is the right inventory to carry.
7. Invest In Online Marketing
Without a doubt, your liquor store should have a strong online presence. It’s no longer sufficient to just have a website. The website should be optimized for local search through Google, Bing and Yahoo. You need to be found in local search and an attractive Search-Engine-Optimized (SEO) website indexed by the main search engines will get you found.
It’s important now to develop your social media as a way to engage your customers. Social media is a great way to connect with new customers, offer promotions, provide discounts, run promotions, etc. Particularly important for liquor store owners is assuring a strong mobile presence. Buyers will often find you using their smartphone, so assuring that your website is mobile-friendly is a smart and necessary marketing decision.
It’s also important to assure your reputation scores are strong particularly on Google and Yelp. This makes a huge difference in sales as so many shoppers compare reviews for quality, services and prices. Make it easy for your customers to leave reviews.
How Mission Peak Brokers can help you buy or sell a liquor store.
For more information on all things related to Liquor Store For Sale in California, Mission Peak Brokers is here to help.
Should you need assistance buying a liquor store, or selling a liquor store, contact Mission Peak Brokers. We have performed hundreds of liquor store valuations and closed numerous liquor store deals. We know the ins and outs of what makes liquor store valuable and how to get the deal done.
For more information on liquor store business opportunity sales, check out our Liquor Store Brokers hub.
In addition to selling liquor store business opportunities, we also manage liquor store commercial real estate.
We are the #1 Liquor Store Brokers in the Bay Area!