Cost is a very important factor when we talk about opening a supermarket as each and everything from financing to profitability, depends upon cost.

Cost of starting a supermarket franchise depends on several factors such as market conditions, location, size, and the most important, which is brand.

If you are looking for starting such a business, it requires substantial capital investment for real estate, licensing, inventory, operational expenses, as well as staffing.

Here we are going to talk about all the cost involved in opening a supermarket franchise in India. 

1. Franchise Fees 

Franchise fee is a particular amount paid to the franchiser to reserve the rights to operate under the brand’s guidance in a particular store.

However, the fees will always very depending upon the brand’s market presence and its customer reach.

A. Small Scale Supermarkets - Franchise fees can range anywhere between ₹7,00,000 to ₹25,00,000 depending upon the location. 

B. Medium Scale Supermarkets - Franchise fees can arrange anywhere between ₹25,00,000 to ₹1,00,00,000. 

C. Large Scale Supermarket Brands - A very well-known and well-established supermarket chain can cost anywhere between ₹1,00,00,000 to ₹5,00,00,000. 

This fee includes all the initial operational cost, staff training, supply chain assistance and the rights to use the established brand identity. 

Also Read: 5 Factors that Affect Supermarket Franchise Cost

2. Inventory Costs

Stocking up the grocery store with the inventory requires substantial initial investment.

This investment includes all the products stock, including fresh products, groceries, household essentials, speciality goods as well as premium goods.

These are the basic items that will influence the cost.

A. Inventory can range anywhere between ₹10,00,000 to ₹30,00,000 for a smaller store and ₹30,00,000 to ₹2,00,00,000 for a larger supermarket. 

B. Supply Chain Management -franchise agreement always provides you with complete details regarding the permission to buy products from specific supply chain contractors, they might also include the cost for transportation and other supplier arrangements. 

3. Location and Real Estate Costs

The location of the supermarket will always impact the sales whereas the location which is always preferable can be really expensive but is generally derived to have increase in food traffic in locations at Premium areas.

These cost include renting or leasing a building and renovating it to run the current business and meet the brand standards. 

A. Purchasing Property 

If we talk about the prime locations, buying commercial property can cost anywhere between ₹6,00,00,000 to ₹15,00,00,000, depending upon the size of the store. 

B. Leasing Costs

If we talk about leasing, it can range anywhere between ₹3,00,000 to ₹30,00,000 per month, depending upon the size of the store. 

C. Renovation

It includes all the costs, such as refrigeration, shelving, lighting, flooring, and signage.

These expenses can range anywhere between ₹5,00,000 to ₹50,00,000 depending upon the size of the store and the quality of material used. 

4. Technology and Equipment's

Nowadays, all the modern supermarket, Riya on advanced technology and systematic equipments for smooth operations.

Here are some of the essential cost for opening a supermarket. 

A. POS ( point of sale) Systems - Cause for all this can range anywhere between ₹10,000 to ₹25,000 depending upon the brand and features involved. 

B. Shelving and Display - Racks and shelving can cost anywhere between ₹1,00,000 to ₹3,00,000. 

C. Security Systems - Cameras, alarms can cost anywhere between ₹25,000 to ₹50,000 depending upon the brand.  

D. Refrigeration - These are very essential for storing perishable items and can cost anywhere between ₹2,00,000 to ₹5,00,000. 

5. Permits and Licensing

You always have to make sure that while opening a supermarket, you follow all the local guidelines and have compliance from all the local federations.

Permit and lighting are mandatory before opening a supermarket and here are the cost involved in it.

A. Trade License - It is issued by the local authority and can cost anywhere between ₹2000 to ₹5000. 

B. GST - GST registration is important if the annual sales increases ₹20,00,000 and can cost anywhere between ₹5000 to ₹10,000. 

C. FSSAI License - It is mandatory for selling all the food related items and can cost anywhere between ₹2000 to ₹5000.  

6. Staffing

If you want to run a fully functional supermarket, it requires a full fledged team with well trained workforce, including Manager, cashiers, stalkers, and cleaning staff.

These include all the cost, such as recruitment, salaries, as well as training. 

A. Initial Training Cost - Brands often provide training which can generally be free and be included in the franchise fees. 

B. Salaries - Dependent upon the store size and number of people, salaries can range anywhere between ₹1,50,000 to ₹10,00,000 per month. 

7. Operating Expenses

Cause for running a supermarket can be very high due to refrigeration, lighting and other general operations, which are run 24 seven. Some of these cost include.

1. Electricity - The bill can range anywhere between ₹1,00,000 to ₹5,00,000 per month, depending upon the size of the store. 

2. Operational Costs - This includes the management, pest control, and other small services which can cost anywhere between ₹10,000 to ₹70,000 per month depending upon the size of the store. 

8. Royalties

Franchise agreement always includes the royalty fees and the percentage is mentioned in detail of the monthly sales.

Generally, it is around 5% to 11% of the monthly sales, depending upon the franchise model and the brand chosen.

If we talk about a supermarket brand with monthly sales of ₹30 lakh , royalty can range from ₹1,50,000 to ₹3,30,000. 

Check out this: Understanding the Supermarket franchise cost in India

Conclusion 

These were all the basic cost and the important cost that are involved while opening a super market franchise in India.

It is a low investment but high profit model and can lead to higher profits if you run the business with proper planning and variety in products.

All the youngest entrepreneur should always conduct market research, and then choose the right brand for them.

Always evaluate the Brands capacity and choose a brand with a thriving sales system to ensure long-term success and profitability.