How to Open a Grocery Store

How to Open a Grocery Store
There’s plenty to think about when you open a grocery store. Follow these steps to make sure you’ve considered all the issues and your grocery store opening goes to plan.
by Square Jul 11, 2022 — 6 min read
How to Open a Grocery Store

There’s something very satisfying about walking into a brick-and-mortar shop and browsing through the fresh, local produce on the shelves that can’t be replicated online. While most grocery stores do maintain a web presence, having a physical shop can be more convenient for local shoppers.

Thinking about opening a grocery store? It pays to do your research and make sure you’re hitting the right target market, with legal requirements in place and the right equipment set up before you open your doors.

Benefits of owning a grocery store

A grocery store is like a small supermarket, often located in a residential area with no big-name supermarket. It fills a much-needed gap for those who don’t own a car, don’t want to drive out of town or simply need to pop round the corner for a carton of milk.

A grocery store will sometimes sell goods that aren’t normally stocked in a supermarket, especially locally sourced items. It can be a hub for the community and a place to connect with others from the neighbourhood, and can also create local employment opportunities.

From a business perspective, once you’re established in an area, you can become the go-to destination for locals who have a last-minute need for that ingredient they forgot or that specialty tea you’ve gained a reputation for selling. Groceries are a necessity, so revenue from your store is likely to beconstant, even when there’s an economic downturn.

Requirements for starting a grocery store

As you’ll be operating a food based business, you’ll need certain licences to make sure your business is up to code. These licences may vary from state to state.

You’ll also need to register for certain tax identifications too:


Check the property you are renting or buying for your business 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. 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 specialist licences.

Food Regulations

There are two main regulations for food safety in Australia – the Food Act 2003 and the Food Standards Code. The Food Act contains the framework for food safety, while the code details how that is implemented. All states operate the same set of rules, though how they implement them will vary from state to state, so check with your local council which rules apply to your area.

All states require you to register as a food business, but how simple or complex this is depends on the nature of your grocery store. If, for example, you intend to sell only pre-packaged foods such as those in a newsagent, then you usually have to notify the local council of your intention to operate. However, if you intend to offer food prepared on the premises such as coffee, cakes, hot meals or sandwiches alongside packaged goods, you will have more obligations. You may be required to register your food business annually, your local council may send an environmental health officer to inspect your business before it opens, and you may need a trained food safety supervisor on the premises during business hours.

Some states also require you to have a food safety programme in place if you intend to operate a butcher’s counter, deli or bakery within your grocery store.

Speak to your local council well before opening to check exactly which permits and actions are required.

How to choose a perfect location for your grocery store

Deciding where to open a grocery store is a very important consideration which can impact the success of your new business. Will you be in a residential area close to plenty of families, or do you want to be located in a business district? A residential setting might be quieter during daytime when people are at work, but traffic peaks early morning and after working hours. An office-centric location might offer strong footfall during the week, but could be very quiet on the weekends.

Don’t forget the competition when you search for the perfect spot. Is your favoured location near an existing supermarket? Are there other grocery stores nearby? Or will you be offering products a customer couldn’t get from a larger retailer or your neighbour down the road? Just remember your grocery store location is key to your business success.


Essential equipment to start a grocery store

There’s a lot to think about when you open a grocery store, especially the kind of equipment you might need:

How to set up payments at your store

There are many ways to pay, so having a POS which offers customers multiple options every time they shop: card payment, contactless, cash or cheque. is critical. You also need an inventory management system to keep track of stock, as well as provide analytics and build up a picture of customer behaviour and habits over time.

Square’s point of sale system is quick to set up and is a cost-effective business solution. It enables you to track sales across all types of payments, print sales reports, manage staff permissions and much more.

Square eader lets you take payments anywhere in your store. Items such as receipt printers, and barcode scanners integrate seamlessly with it. You can accept payments on the go by plugging the Square Reader into a tablet or mobile phone – ideal during busy times when you want to keep queues moving.

## What is the profit margin for grocery stores?

An average grocery store’s profit margins are around 2–2.5%. It is a high-volume business – you might not make much money on a single loaf of bread but if you’re selling hundreds of them a week, then overall profit will increase.

In addition, if you operate a grocery store with a particular niche, for example, artisan breads or sought-after local goods, you’ll be able to charge a premium. Other goods that can command a good mark-up include organic fruit and veg. Non-food items such as batteries and magazines also enjoy higher profit margins.

How to market your business

Marketing your grocery store far and wide is essential to attracting new business, and there are plenty of tactics to try:

What costs are involved in opening a grocery store?

Setting up a grocery store from scratch can be an expensive venture. On average, most small to medium-sized stores will need around $500,0000–$700,000 in start-up capital. This depends on the size of the store, how much work is involved in getting the building ready and how much you intend to spend on start-up inventory, marketing and equipment.

Opening a grocery store is a huge undertaking but it can be a great opportunity, providing you with a decent income and the community with a welcome resource. Let Square POS do some of the heavy lifting for you by making the payment process seamless and helping you stay on top of your inventory from the get-go.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


Keep Reading

Tell us a little more about yourself to gain access to the resource.

i Enter your first name.
i Enter your surname.
i Enter a valid email.
i Enter a valid phone number.
i Enter your company name.
i Select estimated annual revenue.
i This field is required.

Thank you!
Check your email for your resource.

Results for

Based on your region, we recommend viewing our website in:

Continue to ->