Chips v. Wine

I worked out the numbers for both the Chip business and the Wine business. I even ended up interviewing a few people that managed wine stores in other cities to get an understanding of the inner workings of that business. My conclusion is that Chips win. I really like the thought of owning a wine store, but wine has very tight margins. Typically, gross margin on wine is in the neighborhood of 33%. BC claims that their median margin is 44%. I figured that with the assumptions I was making, I could pull in profits of $50-100K per year while working the store as full time manager. This doesn't meet my goals. My assumptions were partially reinforced by conversations with another wine franchise (Wine Styles) based in Ft. Lauderdale.

In conversations with Rebecca P. and reviewing the UFOC, I learned that the other BC stores did somewhere in the neighborhood of $1M in gross sales per year. This was significantly higher than my assumptions, but it didn't seem reasonable seeing as how they would have to sell over 200 bottles a day in order to reach those numbers. Even if you could get those figures, that would only be after seriously working the community. I would have to spend a lot of time at functions and wooing event planners to buy from me. If I did this was true, then the wine store concept couldn't be repeated as easily to achieve growth. I'm assuming that year over year growth would come from additional units (stores) and not additional sales in the existing stores.

I ended up telling Rebecca that we were going to pass on the wine store idea.