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Eye-Opening Industry Trend You Should Know About Now

First, the good news: according to the latest data from NACS’ “State of the Industry” release, US convenience stores had record sales in 2015.

Now the not-so-great news: despite record in-store sales, direct-store operating expenses outpaced inside gross profit dollars in 2015. NACS points out in detail that if this trend continues for 2016 and beyond, it will create big challenges for c-store retailers looking to grow their businesses.

Direct-store operating and facility expenses grew at a same-store rate of 3.8% last year, compared with a 1.6% profitability growth. And this should shock you.

CBC Learning Center instructor Tom Terrono definitely advises c-store owners pay attention.

“This should set off alarms…there is a huge problem when the cost of doing business is increasing faster than profitability,” states Terrono. “When business is good and you are making money, expenses tend to creep up (for instance, a cashier is added). Then business drops off and you are stuck.”

The advice? Terrono suggests not waiting to make changes to things like the number of staff hours needed when business drops off, even just a little. Also, look to cut back on personal spending, which is admittedly harder to do in practice.

“The line between personal and business is fuzzy when you are an owner,” says Terrono. “As a business owner, when business is good, sometimes we take that extra vacation or treat ourselves, which is great. But, when things go the other way in the business, they have to go the other way in the owner’s personal life as well.”

Terrono also points out that many operating costs are fixed, such as utilities, taxes and rent.

“You really have to look for the little stuff. Think through items such as new contracts and if you can afford to be committed to paying out any new agreements. And always tuck away a few months of operating expenses, just in case.”

For more ways to reduce your operating costs, check out CBC’s Owner/Operator Reference Guide!
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