Buying a business: Off-licences
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Popping down to the off-licence for a few bottles of wine or cans of beer is a weekend staple for many of us. Or it might be to collect some ice or a packet of cigarettes. As off-licences continue to become a regular feature in every high street you might be considering it as a viable business proposition. So is it a licence to make money?
What is it?
There are many thousands of licensed premises in the UK. This includes pubs, bars, restaurants, cafés as well as off-licences. The majority of off-licenses are made up of independent stores while the rest comprise of management run chains such as Thresher.
Of the independent variety, many double up as corner shops, convenience stores and/or newsagents, while others specialise in selling varying types of alcohol and pride themselves on their knowledge of good beers, wines and spirits. They may also stock products such as cigarettes, snack foods and the odd lime to squeeze into your gin and tonic on a hot summer’s day.
On the other hand there exist several larger chain-based off-licence companies of which Victoria Wine and Thresher, owned by Allied Domecq and Whitbread respectively, are examples. These stores are well recognised within the market and, along with supermarkets that also sell alcohol at reasonably low prices, offer competition to their independent counterparts. It is worth noting that they are not off-the-shelf businesses and are rarely found on the books of a business agent. Independents, however, do differentiate themselves by specialising in wines and their knowledge of specific products.
David Rhodes of Lakey and Co business transfer agents says there is rarely an easier business to run: “The business is fairly basic apart from the long hours that can stretch into the evening – this can be from about midday until ten o’clock at night. All you have to do is buy in the stock, that is limited to only a certain amount of products and see which ones work and which don’t.”
But competition is rife within this trade and you will have to sell alcohol, snacks and cigarettes alongside a host of other retail food and drink supplying businesses. These will include newsagents, supermarkets, convenience stores, petrol stations, pubs, bars, as well as online rivals who can sometimes undercut your prices and extend the convenience factor by eliminating travel and delivery time.
Competition in the off-licence trade is also something to consider. You will have to compete with the growing volume of cross channel imports or ‘booze cruises’ (people who go on day trips especially to collect beer, wine, spirits and cigarettes from abroad) as well as smuggled alcohol. These areas, says Rhodes, are worth bearing in mind as they can deprive the industry of valuable trade. “To make the business work you will have to consider several factors. These include your location in relation to competition as well as takeaways – who can push business your way – and parking. This seems obvious but if you are on the left-hand side of the road then you can stop a lot more easily and enter the shop.”