So, how should one measure success when building one?
Today’s post is by Ron Southard, CEO at SafeSourcing Inc.
Return on invested capital is a good approach!
The return on capital for building a new convenience store can vary widely depending on numerous factors such as location, size of the store, competition in the area, operational efficiency, and overall market conditions. Generally, convenience stores aim for returns that exceed their cost of capital to justify the investment.
As an example, one company may have a high profile ready to eat or fresh food program but no carwash. Another may have a carwash but limited ready to eat or could have a franchise food offering. Some key areas affecting the return on capital for a convenience store could include all of the following and most businesses perform detailed financial analysis to assess a return that is meaningful for their company.
- Location
- Operating Costs
- Revenue Streams
- Marketing and Branding
- Competitive Landscape
- Economic Conditions
- Regulatory Environment
One area that can have a significant impact on capital is to reduce the use of capital through the use of strategic sourcing tools, like the ones SafeSourcing offers. Most companies in this space do not use them or use them effectively. This should be of concern to investors interested in this area.
Calculating the precise return on capital for a convenience store should involve analyzing the initial investment, ongoing operational costs, and projected revenues over a specific time horizon. Some companies perform detailed financial projections in order to assess the potential return on investment before committing to building a new location.
If you want to reduce costs, I mean really reduce them so you can afford to do other things, Contact SafeSourcing. We guarantee our work, and our ROI is often greater than 10X and immediate.
