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A brick-and-mortar grocery store is still the go-to for shoppers who want to see what’s fresh and choose their own fruits and vegetables, not scroll through a page online and hope for the best.
If you’re thinking about opening a grocery store, a little planning goes a long way in making it successful and profitable. Here’s what you need to know about starting a grocery store, from choosing the right location to getting operations up and running smoothly.
Benefits of owning a grocery store
A good grocery store does more than provide great products to its shoppers. It’s a convenient place for locals to shop and supports the neighbourhood day-to-day.
Some of the biggest benefits of starting a grocery store are:
- Catering to residents who prefer to buy local and shop at their neighbourhood store instead of at supermarket chains
- Providing household items to people who either don’t own a car or can’t drive for various reasons, especially the older residents
- Providing convenience for people who need basic items like milk or bread and don’t want to drive long distances or out of town
- Stocking unique, handmade or artisan products that aren’t usually found in supermarkets
- Acting as a hub for the community where people can connect with their neighbours
- Creating local employment opportunities for younger and older people
- Becoming the go-to destination for last-minute or specialty ingredients for different cuisines
- Providing a more personalised customer service, compared to a bigger supermarket, which helps create loyal customers
How much does it cost to open a grocery store?
In Australia, the cost to set up a grocery store varies widely depending on store size, location (regional or urban), fit-out requirements, refrigeration needs and opening stock.
You have two choices when it comes to opening a grocery store in Australia: you can set up a new store from the ground up or buy an existing grocery store with stock, lease and equipment.
Buying an existing grocery store
If you buy an existing grocery store, your upfront cost is usually tied to how profitable the business is because you’re buying the store’s cash flow, not just the shelves and fridges. In Australia, business sale guides show that existing grocery businesses can range from around $100,000 to $1 million or more depending on location, size, and earnings.
Starting a new grocery store from scratch
A new grocery store typically has three main costs:
- Initial stock or opening inventory: It varies based on store size and range. Broad estimates from the Business for Sale marketplace suggest stock can cost anywhere from tens of thousands to over $1 million for larger stores.
- Fit-out and equipment: Fit-out spend depends on the condition of the premises and whether it’s already configured for food retail. Australian fit-out guides show wide variation between basic and premium fit-outs, driven by finishes, services, and complexity.
- Refrigeration and cold storage: Refrigeration is a major variable cost for grocery stores. Individual commercial units can range from hundreds to several thousand dollars each, depending on size and function. Full-line stores may need multiple display units plus back-of-house cold storage.
If you’re trying to save on costs, choose a site that’s already set up for food retail, as it will reduce the amount of time you wait to open the store and initial costs.
Write a grocery store business plan
It’s good practice to create a business plan to help guide the opening of your grocery store, so you have a clear idea of how much it will cost to start a grocery store and how much you will need to run it.
Opening a grocery store isn’t a small undertaking; every part needs to be planned out because margins are tight, inventory costs are high, and it’s cash-intensive. Even small mistakes can add up quickly and eat into profits, risking long-term growth and sustainability. A strong business plan forces you to prove the model works before you sign a lease or order your first pallet of products.
A good business plan includes the following:
- Executive summary: Include your store’s concept and what makes you different, ideal customer demographics and location.
- Market research and competitor analysis: Define your trading area, competitor map and product gaps. What will you provide that the supermarkets or your competitors can’t?
- Customer profile and demand drivers: Describe your customer segment and their needs. What would drive them to shop at your grocery store?
- Product range and merchandising: List product types, including seasonal ranges and design the store flow.
- Supplier strategy and terms of purchase: Create a supplier list by category and target trading terms, for example, payment terms, discounts, etc.
- Day-to-day operations plan: Include hours of operation, details of inventory management software and processes and markdown strategy.
- Food safety and compliance plan: List strategies to ensure the freshness of food, especially for delis, continued council registration and inspections management.
- Marketing and customer acquisition plan: List strategies to market your grocery store, including pre-launch letterdrops, loyalty programs, and community partnerships.
- Organisational and team structure: Outline key roles, hiring and onboarding employees, and training procedures.
- Financial projections: Include budgets, sales forecast, expenses forecast and break-even analysis to gain a good understanding of numbers.
Requirements for starting a grocery store
As you’ll be operating a food business, you’ll need to meet food safety requirements and register with the right authority before you open your grocery store. The exact steps can vary depending on your state or territory, your local council, and what you sell — for example, packaged groceries only versus fresh produce, deli, or ready-to-eat foods.
In most cases, you’ll need to:
- Register or notify your food business with your local council or state food authority.
- Comply with the Australia New Zealand Food Standards Code, including food handling, hygiene and premises requirements.
- Pass any required inspections for your premises and fit-out (especially if you’re handling unpackaged or higher-risk foods).
Tip: The more fresh food, unpackaged foods or prepared food your store handles, the more detailed and strict the compliance requirements.
Permits
Check that the property you are renting or buying has the necessary permits for use as a grocery store. If not, you can apply to your local council for permission, but you may need to make changes to the premises. Zoning and “change of use” rules vary by council, and if the space hasn’t been used for food retail before, you may need council permission, and carry out upgrades to meet building, fire safety, accessibility and food premises requirements.
If you intend to sell specific items such as tobacco, alcohol, medication, fuel or fresh meat and fish, then you’ll need to apply for further special licences and likely meet more compliance steps. Build this into your timeline and budget early, because these approvals can affect everything from your fit-out to your operating procedures.
You’ll also need to register for certain tax identifications::
- Goods and Services Tax (GST): You need this if your annual turnover is likely to be $75,000 or more.
- Australian Business Number (ABN): This is an ID number that identifies your business and helps you communicate with the ATO.
- Tax File Number (TFN): This is a unique nine-digit number used for tax and other Australian government systems. You can have two TFNs, one for business and one for personal use.
- Pay as You Go (PAYG): You need to register for this if you have staff whose wages are tax-deductible.
- Fringe Benefits Tax (FBT): You need this if you intend to employ staff and offer them benefits such as on-site accommodation or private use of a work car.
Food Regulations
Food safety in Australia is governed by a framework rather than a single law. In practice, grocery stores must comply with certain laws and regulations in:
- The Australia New Zealand Food Standards Code
- State and Territory Food Acts
- Local council requirements
- Food Standards Australia and New Zealand (FSANZ) legislation at the Commonwealth level
All grocery stores must comply with the Australia New Zealand Food Standards Code, but the way you ‘sign up’ as a food business (notification, registration or licensing) varies by state, territory and local council. If you’re selling only low-risk, pre-packaged foods, the process is often simpler and may involve notifying the local council. However, if you’re preparing or handling fresh or unpackaged food on site, you’ll need to meet additional obligations such as premises inspections, ongoing registration or licensing and staff training.
Speak to your local council and Food Authority ahead of opening your grocery store to check exactly which permits and actions are required.
Choose a perfect location for your grocery store
Choosing the right location is one of the biggest decisions you’ll make when starting a grocery store, and it can impact everything from daily foot traffic to your long-term profitability.
Begin by matching the location to the shopping behaviour you want to win. A residential, family-heavy area may be quieter during work hours, but tends to have lots of foot traffic in the early morning, after school and after work. A business district can deliver strong weekday trade, but may drop off sharply on weekends. The goal is to pick a location where your busiest hours line up with the local routine and where your store format fits.
Competition matters just as much as foot traffic. Being near an existing supermarket or other grocers isn’t automatically a deal-breaker, but you’ll need to show why customers should choose you. That could be convenience (closer, easier parking), a smarter range (local, specialty or culturally specific products), better fresh quality of produce, or service that feels more personal.
Before you commit to a lease, walk the area at different times of day, look at how people shop, and pressure-test whether your store can own a specific “shopping mission” that nearby retailers don’t provide.
Design your grocery store
Regular customer flow is the lifeblood of your grocery store. The right layout guides customers where you want them to go, makes shopping effortless and helps increase basket sizes. The wrong layouts will create dead zones, bottlenecks in aisles and customers choosing to shop at the supermarket.
Here are some popular layout suggestions for your grocery store:
- Fresh-first racetrack layout: Places fresh produce at the entrance to signal trust and quality, and creates a clear loop that guides customers past key departments before they enter the aisles.
- Best for: Family suburbs, weekly shop items or top-up shop items and a broad product range.
- Market-hall layout: The perimeter of the store offers a ‘market’ experience, starting with fresh produce and ending with ready-to-eat foods.
- Best for: Higher-income areas, foodie neighbourhoods, stores with a strong fresh or deli focus
- The “convenience spine” layout: Designed for quick trips to the shops and builds a central “spine” from the entrance to checkout. Has clearly marked Express Zones for customers who want to grab-and-go.
- Best for: Commuter areas, areas with apartments, high-frequency top-up shopping
- The “power aisle” layout: Spotlights one main aisle that shoppers naturally go to, such as weekly specials, soft drinks, snacks and household items.
- Best for: Price-competitive neighbourhood grocers
- The “neighbourhood zones” layout: These are clear zones that customers can self-navigate easily, made up of dinner items, lunchbox staples, healthy pantry items, etc.
- Best for: Stores with diverse customer segments
3 tips for designing high-conversion grocery store layouts:
- Place trust-building categories or products at the front of the store, such as fresh produce or bakery items, that allow shoppers to judge quality and freshness in seconds
- Create clear navigation with good signage
- Design the checkout like an experience rather than an obstacle
Essential equipment to start a grocery store
When opening a grocery store, you’ll need more than shelves and a checkout. The right equipment helps you present products well, keep food safe, serve customers quickly and stay on top of stock and cash flow from day one.
Some essential equipment includes:
- Shelving and product displays: You need somewhere to display your goods to the public. The right shelving system can make your store inviting, easy to navigate and efficient. You also need promotional bins and tables for specials.
- Refrigerators and cold storage: These are essential if you intend to sell fresh or frozen products.
- Checkout and payments setup: An integrated point of sale system, such as Square, to take payments, manage inventory and track sales in one place.
- Accounting software: Good accounting software saves you time and money. It integrates with your POS system, and your accountant can access it directly if needed. Square for Retail integrates with popular accounting software such as Xero to streamline the entire process and save time.
- Baskets and/or shopping trolleys: Depending on your store size, you may need to offer both baskets and trolleys for shopper convenience.
- Signage: You’ll need good, clear signage so your customers know where to find the products they want.
- Lighting: Clear, well-designed lighting can create the right atmosphere to increase basket sizes.
- Packaging: You may need branded bags or boxes for customers’ purchases.
- Cleaning supplies and equipment: Keeping on top of the cleaning rota is an essential part of food safety.
- Uniforms: Uniforms help customers easily identify staff, and they also build brand awareness.
- Structural elements: You may need to budget for structural changes to get the store up to code and functioning the way you want.
- Security: CCTV, mirrors for blind spots, anti-theft tagging for high-risk items, and good lighting at entry/exit points.
- Inventory management tools: Use inventory management software like Square for stocktake support, reorder alerts, and reporting to track what’s selling and what’s tying up cash.
Hire and manage your team
Hiring a good team of employees ensures your customers get a consistent experience and that day-to-day operations run smoothly, even during busy periods.
Here are some key things to consider doing when hiring and managing your team:
- Build a role-based roster that covers fresh produce, checkout, replenishment and customer service every day, not just during expected busy periods.
- Plan staffing around trading patterns (weekday vs weekend peaks, after-school rush, seasonal spikes) so you’re not overstaffed midweek and short on weekends. Square Shifts can help you roster to foot traffic, publish schedules instantly, and manage last-minute gaps without the panic.
- Hire individuals with a good attitude and reliability, especially for customer-serving roles, to help create and maintain a good impression of your business.
- Balance experience with flexibility by pairing experienced supervisors (particularly in fresh departments) with casual team members who can cover shifts at short notice. Square Shifts makes it easier for staff to confirm their shifts or swap shifts with others without the back-and-forth calls and texts with the owner.
- Create simple daily and weekly routines to keep standards high for deliveries, promos, shelf gaps, stock rotation, temperature checks, cleaning and shrink control.
- Keep communication in one place so everyone stays aligned across shifts. Square Team Communication helps you share updates and reminders in one channel, reducing missed messages and miscommunication.
A consistent team and shop routine creates a quality shopping experience, and it’s an easy way to build customer loyalty and repeat business, especially for new shops.
Set up payments at your store
Having a point of sale (POS) that offers customers multiple options every time they shop, such as card payment, contactless or cash, is critical for convenience. You also need an inventory management software to keep track of stock, provide analytics and create a picture of customer behaviour and habits over time.
Square POS is quick to set up and is a cost-effective business solution, and helps grocery store owners:
- Speed up checkout with real-time item search and barcode scanning to keep queues moving during busy trade periods
- Sync inventory in real time to show you what’s selling and what to reorder so you avoid stockouts
- Track performance with built-in reporting system that shows which products, categories and vendors drive sales for better purchasing decisions
- Sell fresh produce by weight by integrating with compatible scale devices
- Take click and collect orders online or over the phone for customers who want to order ahead of time
- Set up quickly and scale easily with transparent pricing and no long-term contracts
- Understand customer shopping behaviour with insights you can use to tailor promotions
- Add new locations, devices and employee permissions easily
- Roster team shifts and track hours worked and availability
Market your grocery business
Marketing your grocery store consistently is essential to attracting new customers and turning first-time shoppers into regulars. You don’t need a huge budget to compete; simple marketing done regularly keeps your grocery store business visible.
Here are some marketing strategies to try once you have opened your grocery store:
- Traditional marketing: Leaflet drops in the local area to schools, apartment blocks, libraries, residential areas and other stores to create awareness of the new grocery store.
- Website: You may be a brick-and-mortar grocery store, but an online store can expand your reach to out-of-area customers. With Square Online, you can quickly build a website (no coding required) and integrate it with your POS.
- Word of mouth: Ask family and friends to spread the word, or bring friends in.
- Social media: Facebook, Instagram, Twitter, LinkedIn and TikTok can all be great ways to build your brand and a buzz around your store. Because you can set up accounts for free, social media marketing can be an extremely cost-effective method to get your business online and noticed.
- Google Business Profile: Set up a free business profile on Google to help with local searches. You can add details of your business, location, products and services. It helps people find you when looking for grocery stores in their local area.
- Local promotions: Build a predictable rhythm of promotions such as a weekly “specials” post, seasonal bundles like BBQ, back-to-school, Ramadan/Diwali, and Christmas.
- Collaborations: Partner with local schools and clubs, and spotlight local suppliers so customers feel good about shopping with you.
Square Loyalty and Square Marketing can help you reward regulars and send targeted offers using email marketing, while Square POS reporting shows which products and promos actually drive return visits.
How to open a grocery store FAQs
What licences and permits do I need to open a grocery store in Australia?
You’ll need to apply for different licences and permits from the relevant Food Authority and council in your state or territory. These will include a food business registration or notification, food safety compliance, and premises approvals, plus optional licences depending on what you sell. For example, tobacco, medication or alcohol will need different licences and permits.
- Food business notification/registration (council or state): You generally must notify the relevant Food Authority before you operate
- Comply with the Food Standards Code (food safety standards): Grocery retail must comply with Standard 3.2.2 (food safety practices) and Standard 3.2.3 (food premises & equipment), and many retail businesses also fall under Standard 3.2.2A (food safety management tools), depending on the classification
- Council planning/fit-out approvals: If you’re changing use, renovating, adding signage, you may need council approvals (this varies by council).
- Special licences or permits for tobacco, liquor, and any state-specific licences for higher-risk activities (if applicable). These depend on your State or Territory and what you plan to sell.
What is the average profit margin for a grocery store?
Grocery retail is typically a high-volume but low net-margin business because it has high overheads. Net profit margins vary across different types of grocery stores. At the lower end, net profit margin is between 1-3% for small grocery stores, while specialty grocers that sell premium products have higher net margins. According to a report from The Australian Competition and Consumer Commission, supermarkets Aldi, Coles and Woolworths have some of the highest profit margins in the world.
What’s the best location for a grocery store?
The best location for a grocery store is one with easy access and repeat local shopping missions, not just the highest foot traffic. If the foot traffic doesn’t convert into sales, it won’t matter how many people walk past your grocery store.
Look for:
- Strong catchment density: Households located within a short drive or walk to your store
- Convenience: A simple entry and exit, safe and plenty of parking, easy loading for deliveries and good visibility
- Complementary neighbours: A location near pharmacies, cafes, gyms, schools that attract regular visitors
- Low friction: Minimal competition in the immediate trade area or a clear point of difference if competition is unavoidable
- Right-size rent for your expected sales: Rent pressure can kill grocery stores. The ATO estimates rent to be between 9%-14% of expenses for a business with an annual turnover of $65,000 to $300,000.
Do I need a website if I’m opening a physical grocery store?
No, you don’t need a website if you’re opening a physical grocery store; however, it’s one of the fastest ways to make a local store easier to find and trust. Regular customers who might be unable to come to the store might prefer to order online. Having a website means you don’t lose out on extra sales.
At a minimum, you should have:
- A simple one-page site with opening and closing hours, address, parking, contact, what you stock, and what makes you different
- A strong Google Business Profile setup with photos, categories, services, regular posts and review prompts
You can also use the website to promote click & collect services, weekly specials or catering options to expand your offerings.
