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Liquor Stores

We have years of experience in this industry for the valuation of the business, equipment and real estate. Let us help you with our valuation consultation in all areas of the valuation of liquor store businesses. Below is a brief synopsis of the industry.

Description of Business

Establishments primarily engaged in the retail sale of packaged alcoholic beverages, such as ale, beer, wine, and liquor, for consumption off the premises.

General Industry Information

The liquor store business is a relatively competitive industry, dominated by individually owned “mom and pop” shops. In addition to the retail of liquor bottles and non-alcoholic drinks, these operations typically carry pre-packaged snack foods along with ancillary items, including lottery tickets and cigarettes. There were approximately 28,000 establishments operating in the United States, credited for $28 Billion as of the recent census.

Larger retail operators are generally associated with higher levels of efficiency. The economies of scale of large business is often credited with pushing out independent shops. This trend is illustrated by the continued decrease in total liquor store operators, and the proliferation of larger format stores. Chain store operators have been quicker to adopt point of sale inventory systems, which ensures higher levels of efficiency. Other significant sources of competition for liquor stores include supermarkets which sell liquor, and specialty online retailers (e.g. wine.com, Planet Wine).

Due to the evolving social attitudes about liquor and alcohol consumption, this industry is highly regulated. New mandates are frequently issued by state and local governments with regards to alcohol products sales, so it is beneficial for business owners to stay abreast of emerging regulation.

Additional sales are obtained from tastings in wine bars where additional income can be as high as 20%, and is typically not reported.

Red Flags and Risks

Liquor stores are subject to the negative publicity brought about by alcohol awareness campaigns, and are vulnerable to new restrictions on the sale of alcohol items. Methods of regulation include taxation of product sales, revoking the owner’s liquor license (typically for stores which sell to minors), and adoption of local rules that limit the sale of liquor during certain periods or days of the week. Safety is a huge concern for liquor store workers. OSHA has determined that liquor store operations are the second deadliest industry for employees, behind taxi services. The reasons cited include transactions in cash coupled with late hours of operation, which make employees vulnerable to armed robbery. Buyers may want to look into historical crimes against the property or business.

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