Nothing is quite as enticing as displays full of yummy sweet treats—everyone from young children to grown adults marvels at the colors and styles in a candy shop. And every occasion, from a typical Tuesday to a special anniversary, is enough reason to spend their hard-earned money on sweet treats.
The typical costs to open a candy store can be as modest as a few thousand dollars. However, a modest-sized physical store will take about $50,000 just to open the doors. And business owners should plan to have at least $150,000 on hand to cover operating costs until the business becomes profitable.
- How Much Does It Cost to Open a Candy Store
- Startup Costs
- How to Start a Candy Store
- Potential Revenue of a Candy Shop
- Types of Candy Shops
- The Takeaway
How Much Does It Cost to Open a Candy Store
Nothing is quite as whimsical as opening a candy store. If you are an entrepreneur with a bit of a sweet tooth, you might be wondering how much it costs to open a candy store. The good news is that you can control the costs with scale. On the low end, you could open something simple like a candy cart or candy vending machine business for as little as $5Kor a full-fledged brick and mortar candy shop for a ballpark $50K.
The size and scale of your business will determine the startup costs for reaching your grand opening. From equipment and supplies to inventory and cash reserves, you will need a chunk of change to get things going. The initial startup costs range from $5K to upwards of $50K.
Candy Making Equipment
Will, your candy store buy wholesale sweets to stock your shelves or focus on gourmet treats made in-house? If you are investing in the latter, candy-making equipment will represent a significant portion of your budget. The exact equipment varies depending on the type of candy you will make, but consider purchases like double boilers, candy thermometers, sheet pans, mixing bowls, and whisks. The average initial investment for commercial candy-making equipment is $5,642.00.
Different shops focus on different types of candy. The good news is that you can be pretty creative when it comes to your inventory choices. The key is to balance shelf life with stocking levels so that you are not throwing money away when unsold inventory goes bad. Dark chocolate lasts about twelve months, while milk chocolate lasts eight to twelve months. Hard candies last up to twelve months, chewing gum can last eighteen months, and gummy candies last between six and twelve months.
Many wholesalers require a minimum purchase of $250 – $500 per order. If you can find distributors that sell an assortment of candies, it will be easier to meet the minimums without overstocking certain types of candies.
Packaging, dispensers, and shopping bags are just a few of the things that your store will need to conduct business day-to-day. Most retail shops spend between $500 – $1500 on the packaging and general supplies. Some shop owners might be willing to invest a little more into packaging if it fits with their branding. For example, using eco-friendly or recyclable packaging materials over lower-cost options.
Shelving and Displays
Half of a successful candy store business is in how the treats are displayed. Good retail displays go beyond organization. Proper shelving and display carts are a significant investment. Depending on the size of the shop, you can expect to spend between $2,500 and $10,000 on shelving and display units.
Signage helps businesses communicate essential information. The simplest form of store signage is an open/closed sign for the door. But most modern candy shops invest in signage to label and price inventory, communicate store hours, and let the public know who they are and what they sell. Most shops spend between $500 – $1000 on signage.
In addition to all of the goods and supplies that you will need to open the doors, you will also need some cash on hand to cover expenses for the first few months. Plan for at least three to six months of rent, utilities, payroll, and inventory to get the business going.
How to Start a Candy Store
There are many ins and outs to opening a candy shop. In addition to covering the basic startup costs, there are additional fees for professional services like lawyers and accountants. Here are the basic steps to open a candy shop and some of the costs associated with each step.
Write a Business Plan
Before you take any steps towards opening the business, you should put a plan in writing. Some entrepreneurs do this on their own, and others hire a professional writer to put a plan together. The formality depends on whether the plan will be used to secure funding. A professional writer will charge $500 – $1500 to write a business plan. That amount does not include any market research or focus group studies that may be needed to provide data for the business plan.
Form a Business Entity
A business entity is the legal structure of the business. The fees to form a legal entity vary depending on the type of legal structure selected and the state in which you will do business. You should consult a lawyer prior to choosing a legal structure. Business lawyer retainers typically start at $1,000 and can go much higher. Filing for a business entity can cost as little as $30 or as much as $3,000.
Choose a Business Name
Choosing a name isn’t as simple as it might seem. First, you need to come up with something witty or whimsical that fits your target market. Then you need to make sure nobody else is using that name and then register for it. Registering a business name is free in some jurisdictions and comes with a minimal fee in others, like $100.
Select a Location
Choosing a physical location for your business depends on a few factors. First, you will need a commercial location with good traffic, visibility and parking. Second, you will need to negotiate affordable rent. Commercial rent can vary from a few hundred dollars to several thousand each month, depending on the location.
Apply for Licenses and Permits
Selling food is typically heavily regulated and requires special licensing and permits to do legally. This includes regular inspections from the health department. Costs for a health department permit can be as low as $25 per year.
For most small business startups, you will need to be able to put up 15 – 25% of the total startup costs in order to secure financing from a bank. That means that you should have at least $10,000 on hand and a great business plan if you are asking for a loan or investor for the rest.
Open a Business Account
It is a great idea to keep your business expenses separate from your personal expenses. Most banks do not charge a fee to open an account, but you will need to have the appropriate paperwork in place.
You will need a few different types of insurance before you can hang your shingle out. General liability, commercial property, and workers’ compensation are the standard three. Costs vary greatly depending on the size and location of the business, the number of workers, and typical activities.
Set Up Accounting
You will need to invest in some sort of inventory and cashiering system. The good news is that there are several affordable point-of-sale systems for businesses that cost as little as $500. Plus, accounting software which you can do on your own for around $15 per month. Working with an accountant is also beneficial. Most small businesses spend between $1,000 – $5,000 on accounting services.
Potential Revenue of a Candy Shop
With all of these costs adding up, you might also be wondering what the income potential is for opening a candy shop. There are many factors, and not every business is profitable. Small businesses should plan to stock three times the amount of inventory that they need to sell to be profitable. This will provide a cushion so that the shelves never look bare.
The average candy shop owner makes a modest living between $25,000 – $40,000 annually. Bigger cities bring bigger salaries, but also a higher cost of living. Candy is also a non-essential commodity, and shop owners see a downturn in business alongside downturns in the economy. However, candy is a common purchase for celebrating occasions. Everything from birthdays to graduations and holidays provides a steady stream of customers throughout the year.
Types of Candy Shops
Candy shops come in all shapes and sizes. The great thing about candy shops is that there is no wrong way to do it. You can mix and match as many types of candy as you wish. Or, you can focus solely on one type. The most common types of candy shops are:
- Sugary Confections
- Gummies and Licorice
- Rock Candy, Brittles, and Toffee
Candy shops are popular small businesses that require relatively low startup investments. Candy shops can be seasonal and transportable, which is great for fairs and events. Or, candy shops can be more traditional brick-and-mortar retail establishments. The costs vary depending on size and scope, with average costs falling between $5,000 – $50,000. You may be interested in the cost to open Yoga Studio.