Convenience Store Valuation

     
The valuation of a convenience store depends upon many factors:

1. Type of location (free standing versus shopping center).
2. Sale of gas
3. Lease terms and amount
4. Deli
5. Inside merchandise sales vs. Lotto, money orders or other commission sales.
6. Inventory

As a general rule of thumb, a store is typically valued at 25% to 35% of inside merchandise sales plus inventory.  Click on the link below for a pricing model to use for a rule of thumb valuation approach.

Pricing Model - Convenience Store

The sale of gas doe not help or hurt in most cases.  The profit margin on gas is usually very low and sometimes only adds to overhead cost and headache if you have too many EPA considerations.  Other times, without gas you may not attract as many customers as you need for profitable volume of business.  Location may be the best determinant of whether or not you should sell gas.

Items which can add to a store's value are:

1. Deli operation, if sales warrant the additional staff required to operate the deli.
2. Ratio of beer & wine sales to other general merchandise sales.  Beer & wine sales sometimes have a lower profit margin.
3. Low rent can be a big plus.  Sometimes the rent can be too high in relation to the sales volume and can cut into profits.
4. Neighborhood factors.  Is the convenience store serving a nice neighborhood with a significant customer base of regular customers?  Or, is the neighborhood such that you have to be concerned about shoplifting and special security measures?

For a buyer the aspect of seller financing is always considered beneficial.