Kiosks and Cafeterias
Market characteristics
The sector includes businesses known as kiosks, cafeterias and convenience stores. These shops sell additional consumer goods (nuts and seeds, cigarettes and lighters, soft drinks, alcoholic beverages, newspapers, sweets, snacks and ice lollies, sandwiches, etc). These are products consumed on a daily basis, mostly convenience products that do not require selection or price comparisons, and the outlay for purchasing them is relatively low.
These shops are unique in their large concentration of consumer goods with a high degree of availability, which is manifested inter alia in their convenient location, long opening hours and fast service.
The products sold at these shops have a relatively high level of seasonality. In summertime sales of soft drinks and ice lollies are dominant and in wintertime sales of nuts and seeds, chocolate and alcoholic beverages. Compared to supermarkets, the prices offered at kiosks are significantly higher. The gap is particularly salient in the prices of soft drinks, where the price discrepancy reaches 40% - 210%.
Customers:
These shops serve the general public, but the principal target public is smokers. The premise is that customers purchasing cigarettes may make additional and unplanned purchases. Cigarette sales can reach one third to one half the sales turnover of a typical shop. Customers are divided into two main groups: regular customers and occasional customers.
Suppliers
The wide range of products requires contractual arrangements with a large number of suppliers. A minority of the shops, which roast their own seeds and nuts, also operate as suppliers to other shops. Suppliers offer 30 days credit on average. Many suppliers finance outdoor signage, stands, display shelves and refrigerators for their products in order to win the heart of the business owner and to attract the shoppers’ attention.
Marketing methods
The principal marketing methods are reputation (mainly in the case of nuts and seeds), prominent signage and attractive displays. It is customary to place the ice cream freezers, newspapers and nut and seed stands (at nut and seed shops) in the shop front and not in a shop window. Due to the importance of the availability factor, the opening hours should be as long as possible, including nighttimes. Opening on Friday night and Saturday, mainly in entertainment areas, will contribute to increasing sales.
Factors affecting success
Level of inventory and selection, competitive prices, freshness of the nuts and seeds, quality of service, clean appearance and maintaining hygiene and long opening hours.
Entry barriers in the sector
Fixed costs, preparing the shop and initial stock. The professional barrier is low.
Manpower
Due to the long hours shift work is necessary for operating the business. Only in areas with regular and short working hours (such as various educational institutions and government offices) is it possible to operate the business without additional employees.
Manpower in the sector is generally not professional, although it is advisable for the shop manager and salespeople to possess prior experience. Most of the shops are small; hence one or two salespeople are sufficient. Shops that roast their own nuts and seeds require an additional employee to operate the roasting machines.
Initial investment
The cost of opening a cafeteria/kiosk/convenience store depends on the shop’s size, design and location, the equipment level and the stock level. The principal components of the initial investment are: renovating and adapting the shop, initial stock and equipment. The cost of equipment and goods in order for the kiosk to appear full stands at NIS 70,000 – NIS 80,000. Obtaining the right to sell Toto/Lotto tickets requires a fixed monthly purchase of around NIS 30,000 plus putting up a bank guarantee of at least NIS 50,000.
Customary payment terms
Suppliers – the terms vary, from cash (cigarettes) to EOM + 30.
Sales are mainly in cash; large purchases (at convenience stores) are made by credit card.
Profitability in the Kiosks and Cafeterias sector
The profit percentage by product as a percentage of the sales price, at kiosks and cafeterias
Product Gross profit percentage range
Cigarettes (local and imported) 8% - 12%
Sweets 30% - 40%
Soft drinks 50% - 70%
Cold soft drinks (from the refrigerator) 100%
Sandwiches 60% - 75%
Newspapers 15% - 25%
Ice lollies 33% - 40%
Nuts and seeds 50% - 100%
Risk level in Kiosks and Cafeterias
The risk level in this sector is moderate, there are no cheques to be returned for insufficient funds, but there is also no customer loyalty. This point could change the turnover from profit to loss within a very short time.
Licenses required for opening a business in the sector
A business licence from the local authority and a licence from the Health Ministry. In religious areas a kashruth certificate is essential, but obtaining such a certificate involves giving up the option of operating on Saturdays and festivals.
Insurance
Building and content insurance, inventory insurance, employer’s liability insurance, third party insurance and loss of profit insurance. It is advisable to consult with insurance agents for full and specific coverage.
| Kiosks and Cafeterias
The sector includes businesses known as kiosks, cafeterias and convenience stores. These shops sell additional consumer goods (nuts and seeds, cigarettes and lighters, soft drinks, alcoholic beverages, newspapers, sweets, snacks and ice lollies, sandwiches, etc). These are products consumed on a daily basis, mostly convenience products that do not require selection or price comparisons, and the outlay for purchasing them is relatively low.
These shops are unique in their large concentration of consumer goods with a high degree of availability, which is manifested inter alia in their convenient location, long opening hours and fast service.
The products sold at these shops have a relatively high level of seasonality. In summertime sales of soft drinks and ice lollies are dominant and in wintertime sales of nuts and seeds, chocolate and alcoholic beverages. Compared to supermarkets, the prices offered at kiosks are significantly higher. The gap is particularly salient in the prices of soft drinks, where the price discrepancy reaches 40% - 210%.
Customers:
These shops serve the general public, but the principal target public is smokers. The premise is that customers purchasing cigarettes may make additional and unplanned purchases. Cigarette sales can reach one third to one half the sales turnover of a typical shop. Customers are divided into two main groups: regular customers and occasional customers.
Suppliers
The wide range of products requires contractual arrangements with a large number of suppliers. A minority of the shops, which roast their own seeds and nuts, also operate as suppliers to other shops. Suppliers offer 30 days credit on average. Many suppliers finance outdoor signage, stands, display shelves and refrigerators for their products in order to win the heart of the business owner and to attract the shoppers’ attention.
Marketing methods
The principal marketing methods are reputation (mainly in the case of nuts and seeds), prominent signage and attractive displays. It is customary to place the ice cream freezers, newspapers and nut and seed stands (at nut and seed shops) in the shop front and not in a shop window. Due to the importance of the availability factor, the opening hours should be as long as possible, including nighttimes. Opening on Friday night and Saturday, mainly in entertainment areas, will contribute to increasing sales.
Factors affecting success
Level of inventory and selection, competitive prices, freshness of the nuts and seeds, quality of service, clean appearance and maintaining hygiene and long opening hours.
Entry barriers in the sector
Fixed costs, preparing the shop and initial stock. The professional barrier is low.
Manpower
Due to the long hours shift work is necessary for operating the business. Only in areas with regular and short working hours (such as various educational institutions and government offices) is it possible to operate the business without additional employees.
Manpower in the sector is generally not professional, although it is advisable for the shop manager and salespeople to possess prior experience. Most of the shops are small; hence one or two salespeople are sufficient. Shops that roast their own nuts and seeds require an additional employee to operate the roasting machines.
Initial investment
The cost of opening a cafeteria/kiosk/convenience store depends on the shop’s size, design and location, the equipment level and the stock level. The principal components of the initial investment are: renovating and adapting the shop, initial stock and equipment. The cost of equipment and goods in order for the kiosk to appear full stands at NIS 70,000 – NIS 80,000. Obtaining the right to sell Toto/Lotto tickets requires a fixed monthly purchase of around NIS 30,000 plus putting up a bank guarantee of at least NIS 50,000.
Customary payment terms
Suppliers – the terms vary, from cash (cigarettes) to EOM + 30.
Sales are mainly in cash; large purchases (at convenience stores) are made by credit card.
Profitability in the Kiosks and Cafeterias sector
The profit percentage by product as a percentage of the sales price, at kiosks and cafeterias
Product Gross profit percentage range
Cigarettes (local and imported) 8% - 12%
Sweets 30% - 40%
Soft drinks 50% - 70%
Cold soft drinks (from the refrigerator) 100%
Sandwiches 60% - 75%
Newspapers 15% - 25%
Ice lollies 33% - 40%
Nuts and seeds 50% - 100%
Risk level in Kiosks and Cafeterias
The risk level in this sector is moderate, there are no cheques to be returned for insufficient funds, but there is also no customer loyalty. This point could change the turnover from profit to loss within a very short time.
Licenses required for opening a business in the sector
A business licence from the local authority and a licence from the Health Ministry. In religious areas a kashruth certificate is essential, but obtaining such a certificate involves giving up the option of operating on Saturdays and festivals.
Insurance
Building and content insurance, inventory insurance, employer’s liability insurance, third party insurance and loss of profit insurance. It is advisable to consult with insurance agents for full and specific coverage.
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