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Liquor Stores For Sale: Does Location Really Matter?

I was recently asked by someone that was considering buying a liquor store that is for sale if location really matters.

It made me think, does it?  Some experts believe that while it is still important, location, is not AS important in the liquor store business as it is with other retail businesses.

I think there is a case for both sides of the argument, but I feel as though location really does matter when you are considering a liquor store that is for sale and here's why.

Convenience

It's a fact that location is important for any retail business when it comes to convenience.  Customers are more likely to frequent businesses that are close to their homes or workplace.  If your store is on the route to either location, they may choose you over driving across town to another store.  So with the topic of convenience in mind, yes, I think location matters.  I wouldn't select a store that was in the middle of nowhere or in a place that was difficult to get to.

Inventory & Demographics

Inventory is obviously a key part of the liquor store business. Look at the demographic that surrounds the business.  A liquor store that is located near a University will probably be selling less high end wine and more kegs of beer.  The opposite will be true if you are located in an affluent suburb.  Since liquor stores are thought to be neighborhood businesses, it's important to think about what demographic you want to serve and what you want your inventory to look like.  When it comes to the type of inventory you want to offer, location definitely matters.

Don't get me wrong, I'm sure a liquor store located near a University will probably draw a lot of traffic but it could also cause some issues for your business.

Locations That Can Cause Problems

As I just mentioned, buying a liquor store for sale in an area by a University could lead to a good, profitable business based on the sheer volume you'd be selling however, it could also cause problems for you as the owner.  You have to deal with underage drinkers trying to purchase liquor from your store.  As the owner, you can monitor this while you are working but once you leave your liquor store in an employee's hands, you are leaving yourself open to a potential liability if they don't adhere to proper procedures.  Don't get me wrong, I know this could happen in the suburbs too but I think you would deal with this scenario more frequently in certain locations.  In the state of California, if you are found to have furnished alcohol to a minor there is a minimum fine of $1,000 and 24 hours of community service.

High crime areas could also be a problem.  In addition to underage drinkers, there is the potential for left, robberies and other types of infractions against the business.

Pricing

If you are planning to compete with other liquor retailers solely on price, than location definitely matters.  Whether you are the discount liquor store or the high end liquor store, you need to make sure the liquor store you are considering fits the location. A discount liquor store that has a minimal wine selection but is located in an affluent suburb may find that customers will sacrifice convenience and drive across town to get the wine they want causing them to lose business.  So again, location is important when it comes to pricing.

Summary

To sum it up, yes, in my opinion, location does matter when it comes to buying a liquor store for sale from either a broker or an owner.  The inventory you carry and the headaches you have will be driven by the location of the liquor store in many cases.  So, choose wisely and make sure the liquor store you are considering is located in a place that will allow you to run the type of business you want.

Categories: BizBen Blog Contributor, Buying A Business, How To Buy A Business

Contributor:

Peter Siegel, MBA
Areas Served: Nationwide - All Areas
Phone:  925-785-3118 Cell, 925-785-3118 Text
Peter Siegel, MBA - Founder Of BizBen.com (over 25 years), I am the Lead Advisor for the ProSell, ProBuy, & ProIntermediary Programs. I advise/coach buyers, sellers, and brokers daily about buying & selling small to mid-sized businesses throughout the Nation. I can be reached direct at 925-785-3118.

Comments & Feedback From Pro Intermediaries & Pro Advisors On BizBen:

Posted By: Joe Ranieri, Business Broker: LA, Orange Counties, California    

Great points Peter. I owned liquor stores before I was a business broker, so I have always had an affinity for selling them. Where you own your store can often be indicative of the items you carry. When I owned a store in middle to lower class areas, I would sell more half pints of alcohol vs when I was in more affluent areas I would sell higher end wines and cheeses, etc. As an owner of a liquor store it's important to know your audience. If you own a store in an area where you are going to be selling a lot of wine then it's helpful to know which wines will serve well with certain types of food, because the customer may ask. Sadly many who work at supermarkets really don't know this type of information, so this is an opportunity for an owner to rise above the corporate competition.






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