Buyer's Guide · Convenience Stores
The due-diligence checklist for buying a convenience store
Before you sign on a convenience store, verify six things: the financials (P&L against tax returns and bank statements, with lottery booked as commission, not sales), the lease and any franchise agreement, the licenses that must transfer (tobacco, lottery, alcohol, food), the inventory and the shrink rate, the equipment, and the location's foot traffic. Here's the full checklist, with the exact records and public sources to check each one.
A convenience store has no underground tanks and no fuel supplier, so buyers assume the diligence is easy. It isn't easier; it's different. The risks move from the ground into the paperwork: a lottery line that quietly counts sales instead of commission, a franchise royalty that never shows up on the P&L, a tobacco license that doesn't transfer with the sale, and a shrink problem nobody wrote down. Work the list below before you're emotionally committed.
1.Financials: verify the money is real
- Match the P&L against the federal tax returns and the bank statements. All three should agree within a few percent. The gaps are where stories fall apart.
- Recompute SDE yourself: net profit + the owner's salary + defensible add-backs. Never take the seller's SDE on faith.
- Check the lottery line. The store keeps a commission of roughly 5 to 7% of lottery sales, so $100,000 of lottery volume is about $5,000 to $7,000 of real revenue. A P&L that books lottery sales as store revenue is inflated by design.
- Sanity-check the overall gross margin against the 25 to 35% typical for a standalone c-store. Far above that range needs an explanation, not a celebration.
- Look for a shrink line. Theft and spoilage typically run 1 to 3% of revenue. A P&L showing zero shrink isn't a well-run store; it's an expense someone left out, and it becomes yours.
- Confirm ATM income ($200 to $500 a month if there's a machine on site) is real, not padded.
2.Lease & franchise: confirm you can actually take over
- Get the lease term remaining and confirm it's assignable to you. Rent typically runs 5 to 10% of revenue for a c-store; there's no fuel volume to offset a bad lease.
- If the store is branded (7-Eleven, Circle K, ampm), read the franchise agreement: is it assignable, what's the remaining term, and does the transfer need franchisor approval? Many c-store franchise agreements are not freely transferable.
- Know the royalty math: c-store franchises charge a percentage of gross profit, not revenue. A 7-Eleven store with $400,000 gross profit at a 7% royalty pays about $28,000 a year. If the store is clearly branded and no royalty line appears on the P&L, treat the P&L as incomplete.
- Search county records for liens, judgments, and UCC filings against the business.
- Confirm the business is active and in good standing on the state business registry.
3.Licenses & inspections: the transfer traps
- Confirm the tobacco license transfers, and what the state requires from a new owner. Tobacco and lottery are 15 to 25% of a typical c-store's revenue mix, so a licensing gap is a revenue gap.
- Understand the lottery terminal: it's owned by the state lottery commission, not the store. You're applying for the relationship, not buying the machine.
- If the store sells alcohol, start the license transfer early. It's state-specific and can take months; plan the timeline into the purchase agreement.
- If there's prepared food, pull the health department inspection history and scores. This is public record and non-negotiable.
- If there's cooking equipment, confirm a current fire inspection (hood, suppression, grease trap) and check ADA basics: entrance, aisle widths, restroom.
4.Inventory & shrink: count it, don't trust it
- Count merchandise inventory at closing (typically $15,000 to $40,000), not weeks before. Inventory is usually added to the purchase price separately, so the count is real money.
- Verify tobacco inventory by distributor invoices. It can be $5,000 to $15,000 on its own, and it's the easiest category to overstate.
- Deduct expired and stale stock from the count.
- Ask for the store's shrink rate in writing. If the seller won't put a number on it, budget the high end of the 1 to 3% range and price accordingly.
5.Equipment & the POS: what you're really inheriting
- Inspect the coolers and freezers: replacement runs $5,000 to $15,000 per unit, and compressor age tells you what's coming.
- For the walk-in cooler, ask for temperature logs and maintenance records, not just a walkthrough.
- Check the POS system's age and whether it exports category-level sales data. Your ability to verify revenue by category (tobacco vs lottery vs prepared food) depends on it.
- If there's a kitchen: hood ventilation, suppression system, and grease trap condition.
- Confirm the security cameras and alarm actually work and stay with the store.
6.Location: foot traffic, not just cars
- Unlike a gas station, a c-store lives on foot traffic. Walk the block at morning, lunch, and evening; count people, not vehicles.
- Map what feeds the store: apartments, offices, schools, and transit within walking distance.
- Map the competition within half a mile: other c-stores, dollar stores, and grocery stores all take the same basket.
- Check the area's demographics and income trend (Census.gov) and ask city planning about developments that could add or remove foot traffic.
- Note the lot: corner visibility and easy parking are premiums for a suburban store.
Want the hardest half done automatically?
The financial reconciliation (P&L vs. tax returns vs. bank statements, SDE recomputed, the lottery line checked, the missing expenses flagged) is exactly what BizScore does in minutes, with the evidence behind every finding.
Frequently asked
- How is this different from gas station due diligence?
- No underground tanks, so the six-figure environmental risk is gone. In its place: license transfers (tobacco, lottery, alcohol), shrink, a franchise royalty charged on gross profit instead of revenue, and foot traffic instead of fuel volume. The financial verification core (P&L vs tax returns vs bank statements) is identical.
- What's the most common P&L trick in a convenience store?
- Booking lottery sales as store revenue. The store only keeps a 5 to 7% commission, so $100,000 of lottery volume is roughly $5,000 to $7,000 of actual revenue. Always cross-check the lottery line against the state lottery commission's numbers.
- What documents should I ask the seller for?
- Three years of P&Ls, federal tax returns, bank statements, the lease, the franchise agreement if branded, POS category-level sales reports, tobacco distributor invoices, the shrink history, and an equipment list with ages.
- How long should due diligence take?
- Most buyers negotiate a 30 to 60 day due-diligence window in the LOI. If alcohol is involved, start the license transfer process immediately; it's often the longest pole in the tent.
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About this guide
BizScore is built by first-time business buyers — people who watched someone close to them lose their life savings on a deal that looked clean on a spreadsheet and fell apart in the documents the seller never volunteered. That experience is why these guides exist, and why every BizScore report cites the exact document behind each finding.
Where the numbers come from: the benchmark ranges in our guides — SDE multiples, expense ratios, typical timelines — are widely-used industry rules of thumb, cross-checked against the analytical benchmarks BizScore applies inside its reports. Dollar figures such as a ~$15,000 quality-of-earnings review or a $5,000 deal attorney are representative of what buyers typically pay, not quotes; actual costs and multiples vary by deal. We review these figures periodically — last updated July 2026.
BizScore is an information service — think of it as a Carfax for a small business — not a CPA, an attorney, or financial advice. Use it to decide where to spend your professional dollars, and bring in a qualified professional before you sign anything.
This guide is general education, not a formal business appraisal or financial, legal, or tax advice. Every deal is different. Verify against the actual documents and talk to a qualified professional before you sign anything.