Wine Talk

Snooth User: shanwich55

How Much Does it Cost to Open a Wine Store Outside of NY?

Posted by shanwich55, May 31, 2010.

So, I read this article from NY Mag that has a breakdown in what one couple spent to open a wine store in Brooklyn and I was floored.  

Here it is http://nymag.com/guides/changeyourl...

What would it cost in a smaller city?  I cannot imagine having to sell 90 bottle a day to break even!!!

Replies

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Reply by dmcker, May 31, 2010.

It's worse in Tokyo... ;-(

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Reply by GregT, Jun 1, 2010.

Their costs aren't so bad.  The store is small so inventory stays low.  About fifteen years ago that particular area was full of crack junkies - I got robbed at gunpoint a couple of times.  More recently it's become quite nice and full of professionals and people with a few bucks to spend on a bottle once in a while.  As mentioned, the decor and racking is minimal and they frequently have a bottle or so opend for people to taste. 

They lucked out with the timing of the license and the lease - those can be deadly.  People sometimes wait for a year to get a license for a new store, which is why it's best to buy an existing store.

In NJ however, the license can go for $250,000.  I know someone who's got a successful store for sale at $525,000 if you're interested!

 

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Reply by shanwich55, Jun 1, 2010.

I left NY in February and am now on the West Coast.  I have no real plan of opening a store, nor the capitol.  Just seeing how the other half lives.  :)

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Reply by GregT, Jun 1, 2010.

Lucky you!

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Reply by zufrieden, Jun 3, 2010.

The other half works very hard; it is more a way of life.  From time to time even I am enticed in the direction of flogging fine wines to the general public and have been asked to buy into an operation or two (or at least come and help out).  Taking proper stock of who I am generally means that reality slaps me a good one across the face and I demur. Still, it is interesting to see that stores are within the reach of many ordinary swabs.  

Was that example also in Jersey, Greg?  It wasn't clear.  

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Reply by GregT, Jun 4, 2010.

THe store in the article isn't far from my current house in Brooklyn.  I sell them wine from time to time, or I did.  Haven't in a while.  The price for a liquor license is much lower in NY.  The hassle here is getting the various agencies to coordinate.  You have to file a picture of the store and wait and wait.  So some people buy an existing liquor store and just move the license to the site they want.  And you're only allowed to own one store in NY, so even tho there are 2 Greene Grapes, they are supposed to be under separate ownership so they don't get together and buy volume to pass on discounts.  In NY, the distributors control the legislature.  The  retailers usually don't have that much clout but they have banded together to stop additional competition from grocery stores. 

In NJ, you can own multiple stores so you have these big consortia that get together and buy huge quantities, or get private labels made for them.  It's why some of the best deals on the internet come out of NJ.  In fact, Wine Library was part of one of those groups, but when Gary V got old enough, he convinced his father that he could do better w/out being part of the group.  He was just so far ahead of everyone else he didn't need them.  Still, those guys have a lot of power and since they also want to limit the number of competitors, the number of licenses is limited. 

I do know someone who opened a store in NYC about 15 years ago.  Dropped $500,000 on it.  Several other people opened stores more recently at a fraction of that.  It's not the cost alone tho.  THere's a cash flow issue and fundamentally, cash flow is what drives the whole industry.  You have 30 days to pay your vendors and if you don't they report you to the state and you're on COD.  The big guys also sell Bacardi and the liquors, and you need those, so you have to work with those vendors.  They're also usually ruthless about the COD. The smaller guys will work with you sometimes because they need you as much as you need them. But they can't offer the big labels or the discounts.  You really need to open with a bang and start generating cash right away. 

One of the smartest guys I saw recently bought a run down dump with pigeons in the closet, sold out the crap inventory and started stocking decent wines.  He had minimal shelves and the space was maybe 15 feet by 15 feet.  Super tiny.  But he got the license and started selling.  He took a lease on a much nicer place and was able to start renovations on that while in his tiny place.  Then he announced a move and the whole neighborhood got excited about having a nice wine store.  THe new place is very pretty and he's doing well. 

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Reply by zufrieden, Jun 4, 2010.

Nice follow-up.  The economics of the retail trade is interesting in and of itself, but of particular importance to those whose love of product might coax them into the business.

The trade is far more finicky in most parts of Canada (except, perhaps, Quebec) but equally precarious if local demand is weak due to poor location etc.  A major issue in British Columbia is that hard liquor is the monopoly of the Provincial Liquor Branch.  On top of that, beer and wine are sold in separate outlets - a product, no doubt, of old-fashioned ascetic thinking.  Even wine is sold under different licensing arrangements.  For example, local (Canadian or BC) wine might be sold under one license or sold with international products under a broader license.  The mind boggles.

Anyway, thanks for taking the time to explore the example further for us.

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Reply by dynowine, Jun 4, 2010.

As stated in a note to Shanwich55, my impression here in So. Calif. is the most sustainable wine retailers look a lot more like "Trader Joes for Wine" and a lot less like "Boutique Wine Club outlet".  Their buyers and staff have good-to-excellent palates and deep vendor relationships, and QPR is the dominant theme of the store (not that the stores don't carry $40 to $100 beauties as well).   There are other attributes but I elect not to prattle on about them here.

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Reply by GregT, Jun 4, 2010.

Why?  Prattle on.  That's what you're supposed to do here.


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