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Is a retail liquor store a good investment?

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The BAF Group LLC
MD

It can be. It depends largely on the location, location, location, to a great degree. Some are far better than others - all liquor stores are not created equally. For example, if you are in a blue collar area that drinks mostly beer, it can be a bad profit maker. You may sell a lot, but beer takes up a huge amount of floor (and refrigeration) space, which means your Rent costs could be high; but most of the time, Beer has the poorest of profit margins, compared to hard liquor and wine.

Some people feel that liquor is recession proof. Not so! We have spoken to several store owners that have been struggling, over the past several years. One guy in particular said that he is selling as many bottles today as he did in 2007; but now, instead of selling Johnny Walker Black at $57 for a 1.75L bottle, people are buying Inver House Glen at $13 for the same sized bottle. That's why studying a business over a minimum of a three-year period is critical. You need to know where it has come from, and where it is going.

Feb 29, 2012

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